Thursday December 06 2018
Australia Trade Surplus Narrows in October
Australian Bureau of Statistics | Chusnul Ch Manan | chusnul@tradingeconomics.com

Australia's trade surplus narrowed to AUD 2.32 billion in October 2018 from a marginally revised AUD 2.94 billion in the previous month, and well below market consensus of a AUD 3.2 billion surplus. Both exports and imports hit all-time highs.

Exports increased by 1 percent from a month earlier to an all-time high of AUD 38.05 billion in October, mainly driven by sales of non-rural goods (4 percent to AUD 24.73 billion), in particular coal, coke and briquettes (12 percent), other mineral fuels (4 percent), other manufactures (8 percent), and metals (3 percent). Meanwhile, exports of rural goods went down 7 percent to AUD 3.88 billion, in particular meat and meat preparations (-3 percent), wool & sheepskins -(14 percent), cereal grains and cereal preparations (-15 percent), and other rural (-5 percent). Also, exports of non-monetary gold tumbled 24 percent to AUD 1.14 billion. Additionally, exports of services went up 1 percent to AUD 8.26 billion, boosted by travel (2 percent).
 
Meanwhile, imports jumped 3 percent to a record AUD 35.73 billion in October. Purchases of intermediate and other merchandise goods soared 5 percent to AUD 11.84 billion, boosted by fuels and lubricants (11 percent); other parts for capital goods (6 percent); and processed industrial supplies n.e.s. (2 percent). Also, imports of capital good jumped 8 percent to AUD 6.64 billion, driven by telecommunications equipment (13 percent); machinery and industrial equipment (6 percent); civil aircraft and confidentialised items (26 percent); and ADP equipment (9 percent). In addition, purchases of consumption goods went up 1 percent to AUD 8.80 billion, driven by textiles, clothing and footwear (5 percent); and consumption goods n.e.s. (2 percent). Meantime, purchases of non-monetary gold dropped 7 percent to AUD 333 million. Also, imports of services were almost unchanged at AUD 8.12 billion.
 
Considering the first ten months of the year, the trade surplus widened sharply to AUD 17.62 billion from AUD 11.80 billion in the same period of 2017.




Wednesday December 05 2018
Australia Q3 GDP Growth Weakest in 2 Years
ABS | Rida | rida@tradingeconomics.com

The Australian economy grew a seasonally adjusted 0.3 percent in the September quarter of 2018, slowing sharply from a 0.9 percent expansion in the previous period and missing market consensus of a 0.6 percent advance. This was the weakest pace of expansion since a contraction seen in the third quarter of 2016, mainly due to a sharp slowdown in private consumption and a pull-back in non-residential construction.

Consumer spending grew by 0.3 percent in the third quarter, easing from a 0.9 percent expansion in the previous period and matching the March quarter's five-year low. The modest increase was driven by rises in insurance and other financial services (1.6 percent), food (0.8 percent) and transport services (1.8 percent), while there were falls in consumption of operation of vehicles (-1 percent), other goods and services (-0.7 percent) and purchase of vehicles (-1.3 percent). Meanwhile, government spending went up 0.5 percent in the third quarter (vs 0.9 percent in Q2), largely supported by national government spending (1.9 percent) while state and local government consumption dropped (-0.5 percent).

Gross fixed capital formation grew by only 0.1 percent in the September quarter, the same pace as in the previous period. Public investment rose 3.4 percent with rises across both public corporations (4.8 percent) and the general government sector (2.9 percent). Meantime, private investment fell 0.8 percent, driven by non-dwelling construction (-3.8 percent) and ownership transfer costs (-4.2 percent). Partly offsetting the falls were increases in machinery and equipment (1.3 percent) and dwellings (1.0 percent).

Total inventories increased AUD 47 million, following a rise of AUD 1,223 million last quarter, driven by a build up in retail trade inventories, which exhibited its largest rise since the December quarter of 2015. Partially offsetting the result were declines in wholesale trade, manufacturing and mining.

Exports of goods and services edged up 0.1 percent in the three months to September (vs 1.2 percent in Q2), as sales of goods fell 1.1 percent, with non-rural exports down (-1.7 percent) and rural exports up (0.5 percent), while exports of services jumped 4.5 percent. On the other hand, imports of goods and services dropped 1.5 percent (vs 0.5 percent in Q2) due to lower purchases of goods (-1.9 percent), driven by falls in both consumption goods (-2.5 percent) and capital goods (-2.2 percent). There was a rise in imports of intermediate goods (0.2 percent) while imports of services were flat. 

By industry, health care and social assistance output recorded strong growth (2.6 percent) reflecting ongoing public investment in health care. Growth was also observed in: professional, scientific and technical services (0.9 percent), due to strength in computer system design and related services (3.1 percent); rental, hiring and real estate services (2.5 percent) with strength across both rental and hiring services (5.5 percent) and property operators and real estate services (2 percent); administrative and support services (2.8 percent) driven by continued demand for employment, travel and other specialised services to businesses; financial and insurance services (0.8 percent), led by finance (0.6 percent); public administration and safety (1 percent); and ownership of dwellings (0.6 percent). On the other hand, construction output contracted 2.2 percent, due to heavy and civil engineering construction (-4.5 percent) and construction services (-1.9 percent); and mining shrank 0.9 percent, driven by coal mining (-6.1 percent) and iron ore mining (-0.3 percent).

Through the year to the September quarter, the economy grew 2.8 percent, after a downwardly revised 3.1 percent expansion in the previous period and below expectations of a 3.3 percent growth. It was the weakest annual pace of expansion since Q4 2017.




Tuesday December 04 2018
Australia Holds Cash Rate at 1.5% in December
RBA l Rida | rida@tradingeconomics.com

The Reserve Bank of Australia left the cash rate at a record low of 1.5 percent at its December meeting, as widely expected, extending its record period of policy inaction beyond two years, amid sluggishness in inflation and a slowdown in housing market.

Excerpt from the statement by the governor, Philip Lowe: 

Globally, inflation remains low, although it has increased due to the earlier lift in oil prices and faster wages growth. A further pick-up in core inflation is expected given the tight labour markets and, in the United States, the sizeable fiscal stimulus.

Financial conditions in the advanced economies remain expansionary but have tightened somewhat. Equity prices have declined and credit spreads have moved a little higher. There has also been a broad-based appreciation of the US dollar this year. In Australia, money-market interest rates have declined, after increasing earlier in the year. Standard variable mortgage rates are a little higher than a few months ago and the rates charged to new borrowers for housing are generally lower than for outstanding loans.

The Australian economy is performing well. The central scenario is for GDP growth to average around 3½ percent over this year and next, before slowing in 2020 due to slower growth in exports of resources. Business conditions are positive and non-mining business investment is expected to increase. Higher levels of public infrastructure investment are also supporting the economy, as is growth in resource exports. One continuing source of uncertainty is the outlook for household consumption. Growth in household income remains low, debt levels are high and some asset prices have declined. The drought has led to difficult conditions in parts of the farm sector.

Australia's terms of trade have increased over the past couple of years and have been stronger than earlier expected. This has helped boost national income. Most commodity prices have, however, declined recently, with oil prices falling significantly. The Australian dollar remains within the range that it has been in over the past two years on a trade-weighted basis.

The outlook for the labor market remains positive. The unemployment rate is 5 percent, the lowest in six years. With the economy expected to continue to grow above trend, a further reduction in the unemployment rate is likely. The vacancy rate is high and there are reports of skills shortages in some areas. The stronger labour market has led to some pick-up in wages growth, which is a welcome development. The improvement in the economy should see some further lift in wages growth over time, although this is still expected to be a gradual process.

Inflation remains low and stable. Over the past year, CPI inflation was 1.9 percent and in underlying terms inflation was 1¾ per cent. Inflation is expected to pick up over the next couple of years, with the pick-up likely to be gradual. The central scenario is for inflation to be 2¼ per cent in 2019 and a bit higher in the following year.

Conditions in the Sydney and Melbourne housing markets have continued to ease and nationwide measures of rent inflation remain low. Credit conditions for some borrowers are tighter than they have been for some time, with some lenders having a reduced appetite to lend. The demand for credit by investors in the housing market has slowed noticeably as the dynamics of the housing market have changed. Growth in credit extended to owner-occupiers has eased to an annualised pace of 5–6 per cent. Mortgage rates remain low, with competition strongest for borrowers of high credit quality.




Thursday November 15 2018
Australia Jobless Rate Unchanged at 6-1/2-Year Low of 5%
Rida | rida@tradingeconomics.com

Australia's seasonally adjusted unemployment rate stood at 5 percent in October 2018, the same as in the prior month but slightly below market estimates of 5.1 percent. The jobless rate remained at its lowest level since April 2012.

In October, the number of unemployed increased by 4,600 to 672,100, as people looking only for part-time work went up 9,800 to 226,700, while those looking for full-time work decreased 5,200 to 445,400.

Employment went up 32,800 to 12,671,500, easily beating market consensus of an increase of 20,000. Full-time employment increased 42,300 to 8,703,700, while part-time employment fell 9,500 to 3,967,900.

The labor force participation rate edged up 0.1 points from a month earlier to 65.6 percent and slightly above forecasts of  65.5 percent. Meantime, the employment to population ratio rose by 0.1 percentage points to 62.3 percent.

Seasonally adjusted monthly hours worked in all jobs increased 6.1 million hours, or 0.3 percent, to 1,764.4 million hours.




Tuesday November 06 2018
Australia Leaves Monetary Policy Unchanged
ABS l Rida | rida@tradingeconomics.com

The Reserve Bank of Australia left the cash rate at a record low of 1.5 percent at its November meeting, as widely expected, extending its record period of policy inaction beyond two years. While reiterating that inflation is expected to pick up gradually over the next couple of years, policymakers said they revised up slightly the forecasts for economic growth in 2018 and 2019 to average around 3-1/2 percent amid positive business conditions and rising non-mining investment.

Excerpt from the statement by the governor, Philip Lowe: 

Globally, inflation remains low, although it has increased due to both higher oil prices and some lift in wages growth. A further pick-up in inflation is expected given the tight labour markets and, in the United States, the sizeable fiscal stimulus. One ongoing uncertainty regarding the global outlook stems from the direction of international trade policy in the United States.

Financial conditions in the advanced economies remain expansionary but have tightened somewhat recently. Equity prices have declined and yields on government bonds in some economies have increased, although they remain low. There has also been a broad-based appreciation of the US dollar this year. In Australia, money-market interest rates have declined recently, after increasing earlier in the year. Standard variable mortgage rates are a little higher than a few months ago and the rates charged to new borrowers for housing are generally lower than for outstanding loans.

The Australian economy is performing well. Over the past year, GDP increased by 3.4 per cent and the unemployment rate declined to 5 per cent, the lowest in six years. The forecasts for economic growth in 2018 and 2019 have been revised up a little. The central scenario is for GDP growth to average around 3½ per cent over these two years, before slowing in 2020 due to slower growth in exports of resources. Business conditions are positive and non-mining business investment is expected to increase. Higher levels of public infrastructure investment are also supporting the economy, as is growth in resource exports. One continuing source of uncertainty is the outlook for household consumption. Growth in household income remains low, debt levels are high and some asset prices have declined. The drought has led to difficult conditions in parts of the farm sector.

Australia's terms of trade have increased over the past couple of years and have been stronger than earlier expected. This has helped boost national income. While the terms of trade are expected to decline over time, they are likely to stay at a relatively high level. The Australian dollar remains within the range that it has been in over the past two years on a trade-weighted basis, although it is currently in the lower part of that range.

The outlook for the labour market remains positive. With the economy growing above trend, a further reduction in the unemployment rate is expected to around 4¾ per cent in 2020. The vacancy rate is high and there are reports of skills shortages in some areas. Wages growth remains low, although it has picked up a little. The improvement in the economy should see some further lift in wages growth over time, although this is still expected to be a gradual process.

Inflation remains low and stable. Over the past year, CPI inflation was 1.9 per cent and, in underlying terms, inflation was 1¾ per cent. These outcomes were in line with the Bank's expectations and were influenced by declines in some administered prices due to changes in government policies. Inflation is expected to pick up over the next couple of years, with the pick-up likely to be gradual. The central scenario is for inflation to be 2¼ per cent in 2019 and a bit higher in the following year.


Thursday November 01 2018
Australia Posts Largest Trade Surplus in 19 Months
Australian Bureau of Statistics l Chusnul Ch Manan | chusnul@tradingeconomics.com

Australia's trade surplus widened to AUD 3.02 billion in September 2018 from an upwardly revised AUD 2.34 billion in the previous month, far above market consensus of a AUD 1.70 billion surplus. It was the largest trade surplus since February 2017, as exports rose 1 percent to an all-time high of AUD 37.50 billion while imports declined 1 percent to AUD 34.48 billion.

Exports increased by 1 percent from a month earlier to an all-time high of AUD 37.50 billion in September 2018, mainly driven by sales of non-rural goods (3 percent to AUD 23.61 billion), in particular metal ores and minerals (7 percent), other mineral fuels (6 percent), and other manufactures (2 percent). Also, exports of rural goods went up (1 percent to AUD 4.21 billion), in particular wool & sheepskins (12 percent), cereal grains and cereal preparations (2 percent). Exports of services went up 1 percent to AUD 8.16 billion, boosted by travel (2 percent). By contrast, exports of non-monetary gold tumbled 26 percent to AUD 1.50 billion.
 
Meanwhile, imports fell 1 percent to AUD 34.48 billion in September. Purchases of capital goods dropped 9 percent to AUD 6.09 billion, dragged by civil aircraft & confidentialised items (-45 percent), telecommunications equipment (-1 percent), ADP equipment (-3 percent), machinery and industrial equipment (-5 percent), and capital goods n.e.s (-18 percent). Also, imports of non-monetary gold decreased 14 percent to AUD 0.40 billion. Meantime, consumption goods rose 1 percent to AUD 8.68 billion, as an increase in food & beverages (3 percent), textiles, clothing & footwear (1 percent), toys, books & leisure goods (3 percent), and household electrical items (7 percent) while those of non-industrial transport equipment fell by 3 percent. Arrivals of intermediate & other merchandise goods went up 2 percent to AUD 11.19 billion, due to a rise in fuels & lubricants (8 percent), iron & steel (20 percent), parts for transport equipment (1 percent), parts for ADP equipment (6 percent), paper and paperboard (2 percent), textile yam and fabrics (6 percent), plastics (3 percent), processed industrial supplies n.e.s (4 percent), and goods procured in ports by carriers (1 percent). Imports of services almost unchanged at AUD 8.17 billion, as a rise in transport (1 percent) offset a decline in travel (1 percent).
 
Considering the first nine months of the year, the trade surplus widened to AUD 15.50 billion from AUD 10.88 billion in the same period of 2017.
 


Wednesday October 31 2018
Australia Q3 Inflation Rate Slows to 1.9%
ABS l Rida | rida@tradingeconomics.com

Australia's consumer price inflation eased to 1.9 percent year-on-year in the third quarter of 2018 from 2.1 percent in the previous period. The latest figure was in line with market expectations, mainly due to a marked slowdown in cost of housing.

Year-on-year, cost of housing increased by 1.6 percent in the September quarter, slower than a 3.1 percent rise in the prior quarter, mainly driven by new dwelling purchase by owner-occupiers (2 percent vs 2.7 percent) and utilities (1.9 percent vs 8 percent). Also, cost advanced at a softer rate for: alcoholic and tobacco (6.8 percent vs 7.8 percent in the June quarter); health (3.2 percent vs 3.4 percent); and insurance and financial services (1.4 percent vs 1.5 percent). In addition, cost fell further for: furnishings, household equipment and services (-2 percent vs -0.5 percent); and communication (-4.3 percent vs -4.2 percent).

On the other hand, prices of food and non-alcoholic beverages increased 1.6 percent, faster than a 0.3 percent rise in the second quarter. It was the highest food inflation since the June quarter 2017, largely due to fruits and vegetables (5 percent vs -3.2 percent), bread and cereal products (0.2 percent vs -0.8 percent), and meat and seafood (1.4 percent vs 1.1 percent). Meanwhile, cost of transport went up at a higher 6 percent, after a 5.2 percent gain in the previous period, mostly due to automotive fuels (20.8 percent vs 16.3 percent). At the same time, cost advanced faster for recreation and culture (1.2 percent vs 0.8 percent); and education (2.8 percent vs 2.7 percent), while declined less for clothing and footwear (-0.8 percent vs -2 percent).

RBA Trimmed Mean CPI rose 1.8 percent year-on-year, compared to a 1.9 percent gain in the second quarter and slightly below expectations of 1.9 percent. Quarter-on-quarter, the index increased by 0.4 percent, easing from a 0.5 percent rise in the prior three months and matching estimates. RBA Weighted Mean CPI went up 1.7 percent year-on-year in the three months to September, following a 1.9 percent rise in the June quarter and below forecasts of 1.9 percent.

On a quarterly basis, consumer prices went up 0.4 percent, the same as in the June quarter and matching market consensus. The most significant price rises were international holiday travel and accommodation (4.3 percent), domestic holiday travel and accommodation (2.4 percent), tobacco (1.8 percent) and automotive fuel (1.4 percent). The rise was partially offset by falls in child care (-11.8 percent) and telecommunications equipment and services (-1.5 percent).




Thursday October 18 2018
Australia Jobless Rate Falls to 6-1/2-Year Low of 5%
ABS l Rida | rida@tradingeconomics.com

Australia's seasonally adjusted unemployment rate unexpectedly dropped to 5 percent in September 2018 from 5.3 percent in the previous month while markets estimated 5.3 percent. It was the lowest jobless rate since April 2012, as the economy added 5,600 jobs while the number of unemployed declined by 37,200.

In September, the number of unemployed dropped by 37,200 to 665,800, as people looking for full-time work decreased by 38,000 to 449,700, while those only looking for part-time work increased by 900 to 216,100.

Employment went up 5,600 to 12,636,300, missing estimates of an increase of 15,000. Full-time employment increased 20,300 to 8,654,400 and part-time employment decreased 14,700 to 3,981,900.

The labor force participation rate edged down 0.2 points from a month earlier to 65.4 percent and below consensus 65.7 percent. Meantime, the employment to population ratio remained steady at  62.2 percent.

Seasonally adjusted monthly hours worked in all jobs increased 6.2 million hours, or 0.4 percent, to 1,757.5 million hours.


Thursday October 04 2018
Australia Trade Surplus Larger than Expected
ABS | Rida | rida@tradingeconomics.com

Australia's trade surplus widened to AUD 1.60 billion in August 2018 from a marginally revised AUD 1.55 billion in the previous month, above market consensus of a AUD 1.40 billion surplus. Exports rose 1 percent to a near record while imports were virtually unchanged at an all-time high.

Exports increased by 1 percent from a month earlier to a near record high of AUD 36.56 billion in August, mainly driven by sales of rural goods (3 percent to AUD 4.20 billion), in particular other rural (7 percent), meat & meat preparations (6 percent), and wool & sheepskins (5 percent). Also, exports of non-monetary gold soared 13 percent to AUD 2.02 billion, while sales of non-rural goods dropped 1 percent to AUD 22.71 billion dragged by a decline in shipments of metals (-14 percent), metal ores & minerals (-3 percent), coal, coke & briquettes (-2 percent), and machinery (-3 percent). Exports of services went up 1 percent to AUD 7.61 billion, boosted by travel (1 percent) and other services (1 percent).

Meanwhile, imports were virtually unchanged at an all-time high of AUD 34.96 billion in August. Purchases of consumption goods were flat at AUD 8.64 billion, as an increase in food & beverages (3 percent), non-industrial transport equipment (2 percent) and textiles, clothing & footwear (1 percent) offset a decline in toys, books & leisure goods (-5 percent) and household electrical items (-5 percent). Meanwhile, imports of capital goods grew 9 percent to AUD 6.77 billion, led by civil aircraft & confidentialised items (169 percent), telecommunications equipment (12 percent), ADP equipment (6 percent), and machinery & industrial equipment (3 percent). Arrivals of intermediate & other merchandise goods fell 2 percent to AUD 11.04 billion, due to a drop in fuels & lubricants (-11 percent), iron & steel (-24 percent) and parts for transport equipment (-2 percent). Imports of services increased 1 percent to AUD 8.09 billion, led by travel (2 percent), transport (1 percent) and other services (1 percent).

Considering the first eight months of the year, the trade surplus narrowed to AUD 10.46 billion from AUD 10.86 billion in the same period of 2017.



Tuesday October 02 2018
RBA Holds Cash Rate at 1.5%
RBA l Rida | rida@tradingeconomics.com

The Reserve Bank of Australia kept the cash rate at a record low of 1.5 percent at its October meeting, as widely expected, extending its record period of policy inaction beyond two years, amid sluggishness in inflation and wages and the risk to global growth from trade policy in the US.

Excerpt from the statement by the governor, Philip Lowe: 

Globally, inflation remains low, although it has increased due to both higher oil prices and some lift in wages growth. A further pick-up in inflation is expected given the tight labour markets, and in the United States, the sizeable fiscal stimulus. One ongoing uncertainty regarding the global outlook stems from the direction of international trade policy in the United States.

Financial conditions in the advanced economies remain expansionary, although they are gradually becoming less so in some countries. Yields on government bonds have moved a little higher, but credit spreads generally remain low. There has been a broad-based appreciation of the US dollar this year. In Australia, money-market interest rates are higher than they were at the start of the year, although they have declined since the end of June. In response, some lenders have increased their standard variable mortgage rates by small amounts, while at the same time reducing mortgage rates for some new loans.

The latest national accounts confirmed that the Australian economy grew strongly over the past year, with GDP increasing by 3.4 per cent. The Bank's central forecast remains for growth to average a bit above 3 percent in 2018 and 2019. Business conditions are positive and non-mining business investment is expected to increase. Higher levels of public infrastructure investment are also supporting the economy, as is growth in resource exports. One continuing source of uncertainty is the outlook for household consumption. Growth in household income remains low and debt levels are high. The drought has led to difficult conditions in parts of the farm sector.

Australia's terms of trade have increased over the past couple of years due to rises in some commodity prices. While the terms of trade are expected to decline over time, they are likely to stay at a relatively high level. The Australian dollar remains within the range that it has been in over the past two years on a trade-weighted basis, but it has depreciated against the US dollar along with most other currencies.

The outlook for the labour market remains positive. The unemployment rate is trending lower and, at 5.3 percent, is the lowest in almost six years. The vacancy rate is high and there are reports of skills shortages in some areas. A further gradual decline in the unemployment rate is expected over the next couple of years to around 5 percent. Wages growth remains low, although it has picked up a little. The improvement in the economy should see some further lift in wages growth over time, although this is likely to be a gradual process.

Inflation is around 2 percent. The central forecast is for inflation to be higher in 2019 and 2020 than it is currently. In the interim, once-off declines in some administered prices in the September quarter are expected to result in inflation in 2018 being a little lower than otherwise.

The low level of interest rates is continuing to support the Australian economy. Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual. Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.