Economics

On a seasonally adjusted basis building approvals started 2019 in January with a small fall but on a trend basis (which is designed to smooth out seasonal adjustment fluctuations) approvals fell 3.2% in January to hit their lowest since 2013.

Apart from the Reserve Bank board meeting and a slow of figures starting with the December quarter growth figures in Australia, the February jobs report from the US is the most important event this week for markets outside Australia – unless Donald Trump and China resolve the trade war, or decide to prolong the pain through disagreement.

The coming week is one of the big weeks of the year for the Australian economy – the first week of March, June, September, and December is when the monthly meeting of the Reserve Bank board, the national accounts for the preceding quarter and start of month economic data such as retail sales, building approvals and trade are released.

Wage growth actually slowed a touch in the December quarter according to data released yesterday in the latest Wage Price Index from the Australian Bureau of Statistics.

December’s retail and January car sales slowed more than normal with new figures showing big falls in activity.

Unlike the worst fears of her critics, the NZ Labour-led government of PM Jacinda Arden has not been bad for the country’s economy or its credit rating.

The change in approach from the US Federal Reserve in its post-January meeting statement for the Open Market Committee is another example of how investors and markets should be ‘careful what they wish for’.

Pressures remains on the Reserve Bank to cut interest rates after another weak quarter for inflation in the three months to December.

Now December was either a one-off so far as business conditions are concerned, or it saw the start of a new lower trend that should see concern rise about the further direction of Australian economic growth.

Australia’s job creation boomed slowed sharply in 2018, but growth still topped long term averages according to the December Labour Force report from the Australian Bureau of Statistics (ABS) yesterday.

Japan has joined the likes of China, South Korea, Singapore, Thailand, and Indonesia in revealing a sharp slowdown in exports.

As expected the slowdown in the Chinese economy saw 2018 GDP grow by 6.6% – the lowest annual growth rate for 29 years, supporting the picture of recent weaker performance seen in other indicators such as investment, retail sales, and industrial production.

The final dump of Chinese economic data for December and 2018 has confirmed the economy is in the midst of a worrying slowdown.

Bad news or a one-off reaction to signs of movement in the trade war with Donald Trump’s America? We won’t know for several months, but China’s trade performance in December knocked markets across Asia on Monday.

China’s December and 2018 trade figures showed higher imports of oil, LNG, and coal, steady levels of iron ore shipments and lower levels for soybeans and copper.

Perhaps the best data so far on the extent of the slowdown in domestic demand in China from the car sales data for the country for December and 2018 which showed the first drop in total vehicle sales for 29 years.

The Chinese government has bowed to the inevitable and has set a lower economic growth target for 2019 of 6% to 6.5%.

For Australia, the latest data out of China is both worrying and sort of reassuring.

November’s unemployment data showed all the hallmarks of an end of year set of data – a fall in full-time work as companies adjust their workforces towards the end of the year (such as TV) and a big jump in part-time work as retailers and suppliers and distributors for the great Christmas – New year sales rush boost employment.

Relaxed, but alert? That’s one way of describing the attitude of the nation’s supreme council of financial regulators to the home price crunch and the tighter lending activity.

Australian business conditions and confidence are clearly cooling, judging by the November NAB business survey as the softening that started midyear continued last month.