A very mixed picture for the economy from a slew of figures released yesterday means a half a per cent rate cut is now firmly on the cards.
In fact, with AAP yesterday reporting that all 15 economists in its current survey tipping a half a per cent cut, it seems a certainty.
If only we had such a strong form guide and tipping for the Melbourne Cup, 30 minutes after the RBA cut is revealed.
The picture painted of the economy was on the gloomy side.
Job ads down sharply in October, house prices down in the September quarter across the country and manufacturing contracting as the credit freeze hit home (nowhere near as damaging as in the US).
But inflation fell in October in a bit of good news, which improves the odds of the RBA handing out a cut of half a per cent to go with the shock 1% cut last month and 0.25% in September.
Some commentators worry that the $10.4 billion stimulation package from the federal government could see rates not cut at all, or by just 0.25%.
That would be a big disappointment and contrary to the thinking behind the surprise 1% rate cut in October.
Retail sales were again higher in the trend series for September released by the Australian Bureau of Statistics, but lower according to a not so well trusted seasonal adjustment. The decline was said to be 1.1% in September.
The figures are a bit’ rubbery’ at the moment. The trend figures are certainly not the way homewares and electrical retailers, Harvey Norman and Clive Peeters, or clothing retailer, Noni-B have been reporting their sales performance in recent weeks.
But the low key seasonally adjusted figure is more in keeping with the declines those retailers are reporting.
The gloomiest numbers came in the ANZ jobs ad series, which showed sharp falls in both newspaper and internet employment ads in the month.
The bank said that the number of jobs advertised fell for the sixth consecutive month, tumbling 5.9% overall to an average of 231,135 per week. The bank said that was 9.8% lower than October 2007 and the biggest monthly drop since February 2001.
October’s plunge followed a more sedate 1.4% fall in September.
Warren Hogan, the ANZ’s head of Australian economics said in a statement that "The latest job advertisements data suggest the global financial crisis has had a substantial impact on the Australian economy".
He predicted that hiring intentions will "continue to soften" until they trigger a slowdown in job growth and an unemployment rate of 6.5% by 2010.
We will know more about October when the latest employment figures from the ABS are released on Thursday for October.
The ANZ said that internet job ads dropped 5.5% in October, the third consecutive fall in a row, but newspapers were again the disaster area, with a drop of 12.2% in October, to be down 34.7% over the year.
Newspaper ads fell to an average of 13,350 a week. All states had falls in newspaper job ads, with Western Australia experiencing the biggest fall, 14.8%, followed by Queensland, down 14.1% and the ACT 12.8%.
Internet ads fell 5.5% in October to an average 217,785 a week, down from the recent peak of 255,456 in April this year.
Mr Hogan said the job ads survey would provide a reliable outlook for the health of the local economy.
"This will be an important indicator of the extent of the looming downturn in the Australian economy and the likely trajectory for unemployment over the next few weeks," he said.
The ABS said that the trend estimate of Australian retail turnover "increased by 0.2% in September 2008. This follows a revised increase of 0.2% for each of the last four months.
"In September 2008, four of the six industries had an increase in the trend. Food retailing (+0.6%) had the largest increase.
Also increasing were Clothing and soft good retailing (+0.3%), Department stores and Cafes, restaurants and takeaway food services (both +0.2%). All States, except New South Wales (-0.3%) had an increase in the trend estimate.
"The states with the largest increase in the trend estimate were the Northern Territory (+0.9%), South Australia and the Australian Capital Territory (both +0.6%). The trend estimate for the Australian retail series increased by 2.3% in September 2008 compared with September 2007."
More accurate, seasonally adjusted figures for the September quarter will be released on November 17. Like the jobs figures out on Thursday, the retail sales series has lost some accuracy because of budget cuts forced on the ABS by the Rudd Government.
The claimed 1.1% seasonally-adjusted decline in retail sales during September was worse than market forecasts of a 0.5% fall from the market.
Meanwhile the long awaited fall in house prices has gone up a gear after appearing in the June quarter when the original estimate was for a fall of 0.3% from the March quarter. (That has now been cut to a fall of 0.2%).
The ABS said that the preliminary estimates for the September quarter have given a sharper 1.8% drop across the eight capital cities surveyed.
That produced an annual rise from the September 2007 quarter to the September quarter of this year of 2.8%, substantially lower than the upwardly revised 8.6% increase from June 2007 to the June quarter of this year.
"The capital city indexes fell this quarter in Brisbane (-3.3%), Canberra (-2.5%), Melbourne (-1.9%), Sydney (-1.8%), Perth (-1.1%), and Adelaide (-0.1%), and rose in Hobart (+0.7%), and Darwin (+0.1%).
"Over the year to September quarter 2008, preliminary estimates show that the price index for established houses for the weighted average of the eight capital cities rose 2.8%. Annua
