Today’s Reserve Bank meeting will be overshadowed by a wide open Melbourne Cup, but there is one certainty from the two events – no change in interest rates is at heavy odds-on from the RBA – while any one of half a dozen horses are a chance in the Cup, especially if it is wet.
And it will be no change for quite a while even though figures out yesterday showed more weakness in car sales, especially to private buyers in October, while job ads edged a touch higher last month after a couple of months of weakening activity.
While Shane Oliver, AMP’s Chief Economist, was first to forecast rates remaining on hold until 2020 at least (with a possible cut if the slide in house prices gets too ahead of itself), other groups, such as Westpac have joined the list.
Yesterday we saw Westpac CEO, Brian Hartzer take a very RBA view of the economy, with a bit more from his economics team led by Bill Evans.
“Employment growth is expected to remain solid, with continuing above-trend investment in private and public infrastructure. However, household income growth remains subdued and inflation is low.
“We expect the Reserve Bank of Australia to keep rates on hold throughout 2019,” Mr. Hartzer said in his outlook statement for the bank in its 2017-18 annual results.
Yesterday saw a small steadying in the October ANZ Australian Job Advertisements. The rise of 0.2% last month followed a fall of 0.7% in September.
On an annual basis, growth slowed to 3.6% in October (vs 4.7% in September), the slowest annual growth in ANZ Australian job ads since April 2015.
In trend terms, job ads fell by 0.2% month on month for the fifth consecutive month in October and were up 3.8% year on year.
“After a couple of weak months it is pleasing to see a lift in ANZ Job Ads in October, albeit only a modest gain,” ANZ’s head of Australian Economics, David Plank said in a commentary yesterday.
“ANZ Job Ads have effectively tracked sideways since early this year. The slowdown in employment growth we have seen this year has been broadly consistent with the move in ANZ Job Ads, though in recent months employment growth has outperformed the signal from job ads.
“The unemployment rate has also fallen more sharply than ANZ Job Ads would imply. Other indicators of the labour market, such as the ABS Job Vacancy series, are sending a more positive signal.
“Our ANZ Labour Market Indicator, which combines relevant measures of labour demand, suggests that a further decline in the unemployment rate is more likely than not,” he added.
And it was a similar story from the October car sales data – a 5.3% slide in October to 90,718 units took the fall so far in 2018 to 1.3% to a total of 971,723 from the first 10 months of 2017.
October’s decline for the month was led by falling passenger car sales, at 27,802 or down 23.6% in October compared with October 2017, according to the Federated Chamber of Automotive Industries (FCAI).
Sports Utility Vehicle sales though again rose strongly to 39.849 and accounted for 44% of total vehicle sales in October and 38.5% for the year to date.
Sales in October fell across all states and territories compared to October 2017, other than Tasmania, which held firm with a 0.3 percent increase. The remaining states and territories fell as follows: New South Wales (-9.2%), Victoria (-4.2%), Queensland (-2.7%), Western Australia (-1.7%), South Australia (-5.1%), the ACT (-2.1%) and the Northern Territory (-4.7%).
The FCAI said in a statement the decline was again most pronounced in sales to private purchases, which were down by 12% across all vehicle types for the month compared to October 2017. This included falls in passenger sales to private buyers of 24.1%, whilst private SUVs sales were down by 3.2 percent and light commercial sales down by 4.3%. Year to date sales to private buyers are now down 6.6% compared to the same period in 2017.
While business purchases overall were also down (-4.1%) on October 2017 sales, business purchases of SUVs increased by 13.3% over October 2017 and light commercials increased by 3.4% over the October 2017 sales numbers.
