Economics

Attention refocuses on the health of the Australian economy this week with the release of the September quarter’s Consumer Price Index (CPI) on Wednesday and the start of month economic data, with building approvals, also for September out on Thursday.

Another OK jobs report for September from the Australian Bureau of Statistics on Thursday showed the labour market continues to withstand the stagnation spreading through cars, retailing, home building and construction.

South Korea’s central bank has again cut its key interest rate as the domestic economy and exports continue to sag.

China’s consumer price inflation got another pork push higher in September, while deflation tightened its grip on the country’s huge manufacturing sector.

Like RBA Governor Dr. Phil Lowe and his discovery of a “gentle turning point” in the past month, the NAB reckons there are hints the widespread sag in the economy has “slowed” thanks to an improvement in employment prospects.

Australia recorded another big trade surplus in September – not as large as August’s record, but big enough according to figures released by the Australian Bureau of Statistics (ABS) on Thursday.

Australian car sales continued to fall in September for the 18th month in a row. Figures from the Federal Chamber of Automotive Industries (FCAI) on Thursday showed total sales for September dropped 6.9% to 88,181 vehicles from a year earlier.

A per capita recession on its own is not the same as a real recession, and the three seen over the last 28 years do not compare to the recessions of the early 1980s and early 1990s in terms of their impact on jobs, economic welfare and confidence.

Nothing in the August jobs data that will cause a change of heart at the RBA except to confirm that the economy is running in very low gear with little chance of an improvement in weak wage growth in the next year and higher consumer spending.

Rather than a quarter of negative growth as some gloomy forecasters had been worried about New Zealand enjoyed better than forecast economic growth in the three months to June.

Another warning bell about the health of the major economies and global trade as Japan’s exports fell sharply in August for the 9th month in a row.

The latest Chinese economic data out for August shows the pace of economic activity clearly slowing from the already sluggish pace set in July.

Another lot of negative data about the health of consumer demand in China with car sales down for yet another month.

Chinese producer pricers remained in deflationary territory last month as soaring pork prices left consumer prices unchanged at a high 2.8% annual rate.

After the solid rise in housing finance for July and the second month of rising house prices in Sydney and Melbourne, some silly analysts and media writers are starting to talk about a rebound.

However, while the risks have gone up, recession remains unlikely: tax cuts should help growth in the current half year; the threat from falling property prices has receded; infrastructure spending is booming; the low $A is helping growth; the drag from falling mining investment is over; the current account is in surplus; there is scope for extra fiscal stimulus; population growth remains strong; and cyclical spending is low.

As expected the Australian economy fell to its slowest annual rate of growth in a decade in the 12 months to June after GDP came in at a slightly better than expected 0.5% for the June quarter.

The first current account surplus for 44 years and the last for a while and possibly a slightly better than expected GDP report later today.

The rotten run of retail sales figures continued in July with growth again falling, despite estimates from the market for a small rise based on a post-election bump to confidence and the early impact of tax refunds.

Forget the rebound in house prices in August out yesterday – that’s not an important bit of data at the moment even though it’s welcome. No, the big economic news from yesterday was the sharp fall in business inventories in the June quarter which could very well help produce a negative reading for GDP tomorrow.

No rate cut this week but there will be confirmation the Australian economy is staggering slowly towards stagnation with growth only saved by the one-off boost from surging iron ore prices which won’t be repeated this quarter.

No joy from the June quarter private investment data released yesterday by the Australian Bureau of Statistics. The release showed a fall of 0.5%, against a market forecast of a rise of 0.4%. The overall drop was however slightly better than the revised 1.3% fall (previously -1.7 percent) in the March quarter.

The chances of a negative outcome for the June quarter GDP have risen with the surprisingly large fall in the value of construction work.

Australian Bureau of Statistics data yesterday confirmed that we are in the midst of a period of wage stagnation, with no sign of any improvement.

No good news for the Reserve Bank or the Federal Government from the July survey of business conditions and confidence from the National Australia Bank.

Mixed messages from China’s July trade data. As imports fell 5.6%, exports staged their best monthly performance since March despite the intensifying Trump trade war.

Australia’s trade performance hit record levels in 2018-19, none more so than the surplus which hit an all-time high of record $50 billion.