Thursday January 23 2020
Australia Jobless Rate Unexpectedly Falls to 9-Month Low
ABS l Rida Husna | rida@tradingeconomics.com

Australia's seasonally adjusted unemployment rate unexpectedly was at 5.1 percent in December 2019, compared to market estimates and the previous month's figure of 5.2 percent. This marked the lowest jobless rate since March, as the number of unemployed fell by 12,900 while employment rose by 28,900.

The number of unemployed declined by 12,900 to 693,100 in December. People looking for full-time work dropped by 6,300 to 487,700 and those looking for only part-time work fell by 6,600 to 205,400. Male unemployment decreased by 800 to 378,000, and female unemployment went down by 12,000 to 315,200. 

Employment increased by 28,900 to 12,981,600 people in December, easily beating market consensus of a 15,000 gain. Part-time employment increased by 29,200 to 4,146,900 people, while full-time employment dropped by 300 to 8,834,700 people. 

The participation rate was unchanged at 66.0 percent, remaining at its lowest level since June and matching consensus. Meantime, the employment to population ratio remained steady at  62.6 percent in December.

The underemployment rate was unchanged at 8.3 percent in December, while the underutilisation rate dropped 0.1 points to 13.4 percent.

Monthly hours worked in all jobs increased by 8.2 million hours, or 0.5 percent to 1,791.1 million hours.




Thursday January 09 2020
Australia November Trade Surplus Beats Estimates
Australian Bureau of Statistics | Chusnul Ch Manan | chusnul@tradingeconomics.com

Australia's trade surplus widened to AUD 5.80 billion in November 2019 from a downwardly revised AUD 4.08 billion in the previous month and above market consensus of AUD 4.15 billion.

Exports of goods and services surged 2 percent month-over-month to AUD 40.89 billion in November, as sales of non-rural goods rose 3 percent to AUD 26.17 billion, mainly due to metal ores and minerals (4 percent), other mineral fuels (4 percent), coal, coke and briquettes (1 percent), and metals (10 percent). Also, sales of services rose 1 percent to AUD 8.73 billion, mostly driven by travel (1 percent). Meanwhile, shipments of rural goods were almost unchanged at AUD 4.08 billion, as increases in sales of meat and meat preparations (6 percent) and wool and sheepskins (5 percent) were offset by declines in cereal grains and cereal preparations (-3 percent). Conversely, exports of non-monetary gold fell 6 percent to AUD 1.91 billion.
 
Imports dropped 3 percent to AUD 35.09 billion. Purchases of consumption goods tumbled 7 percent to AUD 8.64 billion, largely due to non-industrial transport equipment (-23 percent), textiles, clothing and footwear (-2 percent), and food and beverages (-3 percent). Also, imports of capital goods slumped 4 percent to AUD 6.33 billion, mainly driven by industrial transport equipment (-13 percent), ADP equipment (-7 percent), and telecommunications equipment (-2 percent); while arrivals of intermediate and other merchandise goods fell 1 percent to AUD 11.10 billion, mostly due to fuels and lubricants (-2 percent), other parts for capital goods (-3 percent), and processed industrial supplies (-1 percent). In addition, purchases of services were down 1 percent to AUD 8.54 billion, largely led by travel (-1 percent), and transport (-2 percent).
 
Considering the first eleven months of the year, trade surplus surged to AUD 63.26 billion from AUD 19.21 billion in the corresponding period of the prior year.




Thursday December 19 2019
Australia Jobless Rate Unexpectedly Falls
ABS | Rida Husna | rida@tradingeconomics.com

Australia's seasonally adjusted unemployment rate edged down to 5.2 percent in November 2019 from 5.3 percent in the previous month, and slightly below market forecasts of 5.3 percent.

The number of unemployed declined by 16,800 to 708,100 in November. People looking for full-time work dropped by 5,500 to 494,300 and those looking for only part-time work fell by 11,300 to 213,800. Male unemployment decreased by 12,600 to 379,800, and female unemployment went down by 4,200 to 328,300.

Employment increased by 39,900 to 12,954,400 people in November, easily beating market consensus of a 14,000 gain. Full-time employment grew by 4,200 to 8,837,300 people and part-time employment went up by 35,700 to 4,117,200 people.

The participation rate was unchanged at 66.0 percent, remaining at its lowest level in four months and matching consensus. Meantime, the employment to population ratio rose 0.1 points to 62.6 percent

The underemployment rate fell 0.2 points to 8.3 percent in November, and the underutilisation rate dropped 0.3 points to 13.5 percent.

Monthly hours worked in all jobs increased by 2.9 million hours to 1,781.2 million hours.


Thursday December 05 2019
Australia Posts Smallest Trade Surplus in 10 Months
ABS l Rida Husna | rida@tradingeconomics.com

Australia's trade surplus decreased to AUD 4.50 billion in October 2019 from a downwardly revised AUD 6.85 billion in the previous month and below market consensus of a surplus of AUD 6.1 billion. This was the smallest trade surplus since December last year, as exports slumped 5 percent month-on-month to AUD 40.75 billion, while imports rose 0.4 percent hitting a record high of AUD 36.25 billion.

Exports slumped 5 percent month-over-month to AUD 40.75 billion in October. Sales of non-rural goods shrank 6 percent to AUD 25.91 billion, mainly due to metal ores and minerals (-11 percent), other mineral fuels (-6 percent), coal, coke and briquettes (-5 percent), and metals (-14 percent). Also, exports of non-monetary gold tumbled 25 percent to AUD 2.03 billion. In contrast, shipments of rural goods grew 3 percent to AUD 4.14 billion, led by meat and meat preparations (4 percent) and cereal grains and ceral preparations (5 percent). In addition, net exports of goods under merchanting jumped 93 percent to AUD 29 million, and sales of services rose 1 percent to AUD 8.65 billion, mostly driven by travel (1 percent). 

Imports rose 0.4 percent over a month earlier to a record high of AUD 36.25 billion. Purchases of consumption goods increased by 4 percent to AUD 9.17 billion, largely due to non-industrial transport equipment (8 percent), food and beverages, mainly for consumption (5 percent) and consumption goods n.e.s. (2 percent). Also, imports of intermediate and other merchandise goods advanced 2 percent to AUD 11.34 billion, driven by fuels and lubricants (6 percent) and other parts for capital goods (6 percent). On the other hand, purchases of capital goods fell 2 percent to AUD 6.59 billion, due to capital goods n.e.s. (-26 percent) and industrial transport equipment n.e.s. (-8 percent). Also, imports of non-monetary gold slumped 35 percent to AUD 469 million. Additionally, purchases of services fell AUD 40 million to AUD 8.69 billion, mostly led by travel (-1 percent) and other services (-1 percent).

Considering the first ten months of the year, trade surplus surged to AUD 58.64 billion from AUD 16.51 billion in  the corresponding period the prior year.


Wednesday December 04 2019
Australia Q3 GDP Growth Below Estimates
ABS l Rida Husna | rida@tradingeconomics.com

The Australian economy advanced a seasonally adjusted 0.4 percent in the September quarter of 2019, slowing from an upwardly revised 0.6 percent growth in the previous period and missing market expectations of a 0.5 percent expansion. Government spending eased and household consumption expanded at its weakest pace since the global financial crisis.

Government spending rose 0.9 percent in the third quarter (vs 2.5 percent in Q2), supported by national defence (3.9 percent), national non-defense (1.8 percent), and national government consumption (2.3 percent), while state and local government consumption declined (-0.1 percent). 

Household consumption grew by 0.1 percent, its weakest since the last quarter of 2018, easing from a 0.3 percent expansion in the prior period, as rises in health (0.9 percent), recreation and culture (0.5 percent), insurance and other financial services (0.3 percent) and food (0.3 percent) partially offset falls in hotels,cafes and restaurants (-0.9 percent), transport services (-1.4 percent), clothing and footwear (-0.6 percent) and purchase of vehicles (-1 percent).

Gross fixed capital formation shrank 0.2 percent, less than a 1.5 percent fall in the June quarter, as private investment dropped at a softer pace (-0.7 percent vs -1.9 percent); and public investment grew 1.9 percent (vs flat reading Q2), driven by state and local public corporations (7.6 percent) and national general government (5.1 percent).

Total inventories decreased AUD 941 million, following a fall of AUD 1,366 million in the prior period, driven by a run down in retail trade, manufacturing and public authorities inventories. 

Exports of goods and services advanced 0.7 percent (vs 1.3 percent in Q2), boosted by increases in non-monetary gold, other mineral fuels and mineral ores, which was partly offset by falls in coal and rural goods. Sales of services rose 1.6 percent, driven by an increase in travel services. Imports of goods and services fell 0.2 percent (vs -1.1 percent). Imports of services declined 1.6 percent driven by a fall in transportation services. 

On the production side, output growth slowed in mining (0.7 percent vs 3.6 percent); information media and telecommunications (0.8 percent vs 1.5 percent); professional, scientific and technical services (1.3 percent vs 1.8 percent); accommodation and food services (0.1 percent vs 1.7 percent); rental, hiring and real estate services (0.2 percent vs 0.8 percent); and public administration and safety (1.2 percent vs 1.9 percent). Additionally, agriculture, forestry and fishing output shrank 2.1 percent, after expanding 0.2 percent in the second quarter of the year. Meantime, output contracted at a slower pace in manufacturing (-0.6 percent vs -1.2 percent); electricity, gas, water and waste services (-0.3 percent vs -0.8 percent); wholesale trade (-0.7 percent vs -1.4 percent); and transport, postal and warehousing (-0.4 percent vs -0.5 percent). At the same time, output grew faster in health care and social assistance (2.6 percent vs 1.8 percent); and administrative and support services (1 percent vs 0.9 percent). Also, output rebounded in both construction (0.5 percent vs -1.2 percent); and retail trade (0.1 percent vs -0.1 percent). 

Through the year to the third quarter, the economy grew 1.7 percent, compared to an upwardly revised 1.6 percent expansion in the June quarter, matching market forecasts.




Tuesday December 03 2019
RBA Holds Cash Rate Steady at 0.75%
RBA | Rida | rida@tradingeconomics.com

The Reserve Bank of Australia left the cash rate unchanged at a record low of 0.75 percent during its December meeting, as policymakers assess the impact of the three cuts already delivered this year. The board added that they will continue to monitor the labor market and that it was reasonable to expect an extended period of low interest rates due to both global and domestic factors. Policymakers are also prepared to ease monetary policy further if needed to support growth.

Excerpt from the statement by Governor Philip Lowe: 

The outlook for the global economy remains reasonable. While the risks are still tilted to the downside, some of these risks have lessened recently. The US–China trade and technology disputes continue to affect international trade flows and investment as businesses scale back spending plans because of the uncertainty. At the same time, in most advanced economies unemployment rates are low and wages growth has picked up, although inflation remains low. In China, the authorities have taken steps to support the economy while continuing to address risks in the financial system.

Interest rates are very low around the world and a number of central banks have eased monetary policy over recent months in response to the downside risks and subdued inflation. Expectations of further monetary easing have generally been scaled back. Financial market sentiment has continued to improve and long-term government bond yields are around record lows in many countries, including Australia. Borrowing rates for both businesses and households are at historically low levels. The Australian dollar is at the lower end of its range over recent times.

After a soft patch in the second half of last year, the Australian economy appears to have reached a gentle turning point. The central scenario is for growth to pick up gradually to around 3 percent in 2021. The low level of interest rates, recent tax cuts, ongoing spending on infrastructure, the upswing in housing prices and a brighter outlook for the resources sector should all support growth. The main domestic uncertainty continues to be the outlook for consumption, with the sustained period of only modest increases in household disposable income continuing to weigh on consumer spending. Other sources of uncertainty include the effects of the drought and the evolution of the housing construction cycle.

The unemployment rate has been steady at around 5¼ percent over recent months. It is expected to remain around this level for some time, before gradually declining to a little below 5 per cent in 2021. Wages growth is subdued and is expected to remain at around its current rate for some time yet. A further gradual lift in wages growth would be a welcome development and is needed for inflation to be sustainably within the 2–3 per cent target range. Taken together, recent outcomes suggest that the Australian economy can sustain lower rates of unemployment and underemployment.

Inflation is expected to pick up, but to do so only gradually. In both headline and underlying terms, inflation is expected to be close to 2 percent in 2020 and 2021.

The easing of monetary policy this year is supporting employment and income growth in Australia and a return of inflation to the medium-term target range. The lower cash rate has put downward pressure on the exchange rate, which is supporting activity across a range of industries. It has also boosted asset prices, which in time should lead to increased spending, including on residential construction. Lower mortgage rates are also boosting aggregate household disposable income, which, in time, will boost household spending.




Thursday November 14 2019
Australia Jobless Rate Inches Higher to 5.3% in October
ABS l Rida Husna | rida@tradingeconomics.com

Australia's seasonally adjusted unemployment rate rose to 5.3 percent in October 2019 from 5.2 percent in the previous month and matching market expectations. The number of unemployed increased by 17,100 while employment unexpected fell for the first time in 17 months (-19,000).

The number of unemployed rose by 17,100 to 726,100 in October. People looking for full-time work went up by 13,000 to 500,300 and those looking for only part-time work increased 4,100 to 225,800. Male unemployment grew by 5,200 to 392,900, and female unemployment rose 11,900 to 333,200.

Employment decreased by 19,000 to 12,919,200 people in October, missing market consensus of a 15,000 gain and compared to a downwardly revised 12,400 increased in September. Full-time employment fell 10,200 to 8,833,800 people and part-time employment decreased by 8,700 to 4,085,400 people.

The participation rate inched lower 0.1 point to a four-month low of 66.0 in October, below forecasts of 66.1 percent. Meantime, the employment to population ratio dropped 0.2 points to 62.5 percent

The underemployment rate increased 0.2 points to 8.5 percent in October, and the underutilisation rate advanced 0.3 points to 13.8 percent.

Seasonally adjusted monthly hours worked in all jobs decreased by 2.8 million hours, or 0.2 percent, to 1,783.9 million hours.


Thursday November 07 2019
Australia Trade Surplus Widens in September
Australian Bureau of Statistics | Chusnul Ch Manan | chusnul@tradingeconomics.com

Australia's trade surplus increased to AUD 7.18 billion in September 2019 from a revised AUD 6.62 billion in the previous month and compared to market consensus of AUD 5 billion.

Exports rose 3 percent from a month earlier to an all-time high of AUD 43.22 billion in September. Sales of non-rural goods advanced 2 percent to AUD 27.92 billion, mainly boosted by metals (14 percent), metal ores and minerals (3 percent) and other mineral fuels (8 percent), while declines were seen in coal, coke and briquettes (-6 percent) and other manufactures (-1 percent). Also, exports of non-monetary gold surged 26 percent to AUD 2.69 billion, and shipments of rural goods went up 6 percent to AUD 3.98 billion, led by meat and meat preparations (2 percent) and other rural (6 percent). In addition, sales of services grew 1 percent to AUD 8.61 billion, mostly driven by travel (1 percent) and other services (1 percent).
 
Imports increased also 3 percent to AUD 36.03 billion, the second-highest on record. Purchases of consumption goods rose 1 percent to AUD 8.76 billion, largely due to consumption goods n.e.s (1 percent), non-industrial transport equipment (2 percent), and textiles, clothing and footwear (4 percent). Food and beverages, however, fell 4 percent. Also, imports of capital goods jumped 12 percent to AUD 6.75 billion, mostly driven by telecommunications equipment (10 percent) and capital goods n.e.s (80 percent) while machinery and industrial equipment imports dropped 3 percent. Additionally, purchases of intermediate and other merchandise goods increased 4 percent to AUD 11.06 billion, boosted by fuels and lubricants (8 percent) and processed industrial supplies n.e.s (7 percent). Conversely, purchases of non-monetary gold tumbled 34 percent to AUD 0.73 billion, while those of services were unchanged at AUD 8.74 billion.
 
Considering the first nine months of 2019, the trade surplus soared to AUD 54.36 billion from AUD 14.08 billion in the corresponding period the prior year.


Tuesday November 05 2019
Australia Holds Cash Rate at Record Low of 0.75%
RBA | Rida Husna | rida@tradingeconomics.com

The Reserve Bank of Australia left the cash rate unchanged at a record low of 0.75 percent during its October meeting, as widely expected, with policymakers assessing the impact of the three cuts already delivered since June. The board added that given global developments and the evidence of the spare capacity in the economy, it is reasonable to expect that an extended period of low interest rates will be required in Australia to reach full employment and achieve the inflation target. Also, they will continue to monitor the labor market, and are prepared to ease monetary policy further if needed to support sustainable growth, full employment and the achievement of the inflation target over time.

Excerpt from the statement by Governor Philip Lowe: 

While the outlook for the global economy remains reasonable, the risks are tilted to the downside. The US–China trade and technology disputes continue to affect international trade flows and investment as businesses scale back spending plans because of the uncertainty. At the same time, in most advanced economies, unemployment rates are low and wages growth has picked up, although inflation remains low. In China, the authorities have taken steps to support the economy while continuing to address risks in the financial system.

Interest rates are very low around the world and a number of central banks have eased monetary policy in response to the persistent downside risks and subdued inflation. Expectations of further monetary easing have generally been scaled back over the past month and financial market sentiment has improved a little. Even so, long-term government bond yields are around record lows in many countries, including Australia. Borrowing rates for both businesses and households are also at historically low levels. The Australian dollar is at the lower end of its range over recent times.

The outlook for the Australian economy is little changed from three months ago. After a soft patch in the second half of last year, a gentle turning point appears to have been reached. The central scenario is for the Australian economy to grow by around 2¼ percent this year and then for growth gradually to pick up to around 3 percent in 2021. The low level of interest rates, recent tax cuts, ongoing spending on infrastructure, the upswing in housing prices in some markets and a brighter outlook for the resources sector should all support growth. The main domestic uncertainty continues to be the outlook for consumption, with the sustained period of only modest increases in household disposable income continuing to weigh on consumer spending. Other sources of uncertainty include the effects of the drought and the evolution of the housing construction cycle.

Employment has continued to grow strongly and has been matched by strong growth in labour supply, with labour force participation at a record high. The unemployment rate has remained steady at around 5¼ percent over recent months. It is expected to remain around this level for some time, before gradually declining to a little below 5 per cent in 2021. Wages growth remains subdued and is expected to remain at around its current rate for some time yet. A further gradual lift in wages growth would be a welcome development and is needed for inflation to be sustainably within the 2–3 percent target range. Taken together, recent outcomes suggest that the Australian economy can sustain lower rates of unemployment and underemployment.

The recent inflation data were broadly as expected, with headline inflation at 1.7 percent over the year to the September quarter. The central scenario remains for inflation to pick up, but to do so only gradually. In both headline and underlying terms, inflation is expected to be close to 2 percent in 2020 and 2021.

There are further signs of a turnaround in established housing markets, especially in Sydney and Melbourne. In contrast, new dwelling activity is still declining and growth in housing credit remains low. Demand for credit by investors is subdued and credit conditions, especially for small and medium-sized businesses, remain tight. Mortgage rates are at record lows and there is strong competition for borrowers of high credit quality.


Wednesday October 30 2019
Australia Q3 Inflation Rate Matches Estimates
ABS l Rida Husna | rida@tradingeconomics.com

The annual inflation rate in Australia inched higher to 1.7 percent in the September quarter of 2019 from 1.6 percent in the previous period and in line with market expectations. This was the highest inflation rate since the fourth quarter last year, mainly due to a rebound in cost of furnishings, household equipment and services while transport prices slowed markedly.

Year-on-year, prices went up at a faster pace for alcohol and tobacco (6.6 percent vs 5.9 percent in Q2), health (3.1 percent vs 3 percent), and clothing and footwear (1.5 percent vs 0.2 percent). Additionally, cost of furnishings, household equipment and services rebounded (1.8 percent vs -0.4 percent). Also, prices of communication fell at a slower rate (-4.1 percent vs -4.4 percent).

On the other hand, transport prices increased 0.7 percent, slowing noticeably from a 1.7 gain in the June quarter, mainly due to automotive fuels (-3.9 percent vs -0.5 percent). At the same time, prices of food and non-alcoholic beverages increased by 2.3 percent in the third quarter, easing from a 2.4 percent gain in the prior period, of which fruits and vegetables (0.7 percent vs 5.6 percent); oils and fats (0.8 percent vs 1.3 percent); and milk (1.7 percent vs 2 percent). In addition, cost slowed for housing (0.4 percent vs 0.5 percent), namely new dwelling purchase by owner-occupiers (-0.1 percent vs 0.2 percent); recreation and culture (1.7 percent vs 1.8 percent); and insurance and financial services (0.5 percent vs 0.9 percent). Meantime, inflation was steady for education (at 2.8 percent).

RBA Trimmed Mean CPI rose 1.6 percent year-on-year in the three months to September, the same pace as in the previous quarter and matching market forecasts. Quarter-on-quarter, the index advanced 0.4 percent, unchanged from the previous period and in line with estimates. RBA Weighted Mean CPI stood at 1.2 percent, below market estimates of a 1.3 percent gain.

On a quarterly basis, consumer prices increased by 0.5 percent in the third quarter, after a 0.6 percent rise in the the June quarter, matching market expectations. The most significant price rises this quarter are international holiday, travel and accommodation (6.1 percent), tobacco (3.4 percent), property rates and charges (2.5 percent) and child care (2.5 percent) were offset by declines in cost of automotive fuel (-2.0 percent), fruit (-3.1 percent) and vegetables (-2.5 percent).