29 September 2020
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Is the economy weak? Look at the scoreboard!

Peter Switzer
12 April 2017

By Peter Switzer

Tomorrow could be a revealing day for our economy with the latest jobs report out. The February reading saw the jobless rate go up from 5.7% to 5.9%, but you can never trust one month’s statistics.

When CommSec’s Craig James saw the numbers, this is what he wrote: “It would be easier to accept the latest jobs data if it lined up with other evidence but it doesn’t. 

“There have been healthy business surveys in recent months, with the NAB business conditions index hitting 9-year highs in January. Mining prices have lifted, the agricultural sector is buoyant, tourist arrivals are at record highs and more homes are being built than ever before. 

“Certainly leading indicators like job ads are pointing to higher rather than lower, and low real unit labour costs give employers plenty of reasons to be taking on staff.”

That accepted, the Australian economy has, on some measures, slipped a gear into a slightly slower pace of growth. On other indicators, it continues to impress. The professional economists say the data is mixed. In its recent ramblings, the Reserve Bank has quietly stepped away from its 3% growth expectation for 2017, though it hasn’t gone too negative on us.

Our last growth reading was a great 1.1% number for the December quarter. If we were in the USA, that number would be annualised or multiplied by four and we’d be calling it a 4.4% result. That would be huge in the US, where in Trumpland they’re only producing 2% growth rates!

Our September number was a shocker, coming in at minus 0.5%. However it was a rogue one-off — thank God!

So what’s the latest local economic show and tell? Here goes:

  • The CoreLogic Home Value Index of capital city home prices rose by 1.4% in March and was up 12.9% over the year. 
  • The NAB business conditions reading was the best in nine years! It went from 9.3 to 14.2 in March and the long-term average is only 5.
  • Business confidence slipped from 6.7 to 6.1 but that’s still a solid result. The long-term average being 5.8.
  • Consumer confidence has been disappointing but the ANZ/Roy Morgan reading for the week of April 11 was up 3.3% to 114.8, which beats the average since 2014 of 113.2.
  • There were 105,410 new vehicles sold in March, the highest for any March month and 0.9% higher than a year ago.
  • The Performance of Services index rose by 2.7 points to 51.7 in March and edging closer to the 8½-year high of 54.5 in January. Any number over 50 means expansion.
  • The Performance of Manufacturing index eased from 15-year highs, down by 1.8 points to 57.5 in March. This was the sixth consecutive month of expansion.
  • Total household wealth (net worth) stood at a record $9,404.5 billion at the end of December 2016, up $328.1 billion, or 3.5%, over the quarter – marking the largest quarterly increase in net wealth in seven years. 
  • Job vacancies rose by 1.8% to 185,600 in the three months to February – a 6-year high. Job vacancies are up 7.3% on a year ago.
  • The number of passengers on the Sydney-Melbourne route rose in January, up 1.6% on a year ago. The Sydney-Melbourne route is a key measure of business activity.
  • Private sector credit rose by 0.3% in February after a 0.2% gain in January. Annual credit growth of 5% is near 3-year lows.
  • The Commonwealth Bank Business Sales Indicator (BSI) – a measure of economy-wide spending – rose by just 0.1% in trend terms in February, the slowest growth in two years.
  • The trade surplus lifted from $1,503 million to $3,574 million in February. 
  • In trend terms, exports are up 30.9% on a year ago – the fastest pace in eight years.
  • Unemployment rose from 5.7% to 5.9% in February but let’s hope this is not a trend.
  • The overseas story remains promising, with even Europe showing positive growth signs. The global story partly explains why stock markets are so positive.

And then there’s Trump and what he promises. Until further notice, it’s OK to be relatively optimistic on the Oz economy.

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