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Thursday, 18 October

04:30

The Future of Australian Employment "IndyWatch Feed Economics.au"

Aussies arent afraid of some hard yakka.

After all, thats what our economy is built on, right?

Most of us connect the phrase with the stockman and the sheep shearers labouring away under the hot Australian sun.

The phrase hard yakka was first recorded in 1847, however its roots come from the aboriginal word yaga, meaning hard work.

The saying has evolved from the outback to being used most amongst our tradies.

Theyre the very backbone of the modern Aussie economy. The workers doing the hard yards, putting together the buildings we live in and the roads we drive on.

Theirs are the sort of jobs that make up more than 10% of our total employment.

A place to call your own

I often write about how Australia is a consumerist society.

We are a nation that buys things. More than 55% of our gross domestic product comes from the sales of goods and services.

Thats a fair chunk of income from one sector.

But construction in Australia contributes to almost 10% of GDP. Well above the 8% that mining does.

So, not only are we nation that buys things, but we are also a nation that builds things.

The problem is, we dont build things to export. We arent a manufacturing country. We sent that job offshore to the lowest bidder a couple of decades ago.

No. What we build is just for us. And most importantly, its funded by ever-growing lines of credit.

As the demand for housing, apartments and commercial buildings grew over the past 15 years, so did the workforce.

In fact, the construction workforce has nearly doubled in size in that time.

Demand for work was one reason but the higher than average pay was another.

The average pole turner I think traffic controller is the official job title has a starting salary of $30 per hour. Add in hazard pay, site allowance and some overtime, and an unskilled position can earn someone $80,000 a year.

I have personally watched young women give up their low paid, $20 an hour child care role. They willingly walk onto a construction site, don the pink, steel-capped boots and a hi-vis vest. By flipping a pole around in the rain and wind, these young women have doubled their take-home pay.

Skilled labour rates are also high.

For example, a fully licensed electrician in Victoria has an hourly rate of $53. Again, throw in the union-deal sweeteners and the average sparky can bring more than one hundred grand a year.

The rates are pretty similar for fully qual...

04:27

Australian labour market weaker no employment growth and participation down "IndyWatch Feed Economics.au"

Today, the Australian Bureau of Statistics released the latest data Labour Force, Australia, September 2018 which show that the Australian labour market has weakened, with employment growth virtually zero. Compounding that weakness was a sharp decline in the participation rate (0.3 points). Taken together, unemployment and the unemployment rate fell but this is a sign of weakness not improvement. The decline in unemployment is because workers gave up looking for jobs in a weak labour market. Monthly hours worked remained on a flat trend. Overall, my assessment is that the Australian labour market remains in a fairly weak state and, is still a considerable distance from full employment. There is clear room for some serious policy expansion at present.

The summary ABS Labour Force (seasonally adjusted) estimates for September 2018 are:

  • Employment increased 5,600 (0.04 per cent) full-time employment increased 20,300 and part-time employment decreased 14,700.
  • Unemployment decreased 37,200 to 665,800 but only because participation fell.
  • The official unemployment rate decreased by 0.3 points to 5.0 per cent.
  • The participation rate decreased by 0.2 points to 65.4 per cent, and remains well below its previous peak (December 2010) of 65.8 per cent.
  • Aggregate monthly hours worked increased 6.2 million hours (0.4 per cent).
  • The monthly broad underutilisation estimates for September 2018 show that underemployment was steady at 8.7 per cent (1,103.2 thousand). The total labour underutilisation rate (unemployment plus underemployment) was 13.3 per cent. There were a total of 1,768.9 thousand workers either unemployed or underemployed.

Employment increased by only 5,600 in September 2018

Employment growth was virtually zero in September.

Total employment rose by 5,600 (0.04 per cent) full-time employment increased 20,300 and part-time employment decreased 14,700.

It reverses last months stronger result, which were, in part, driven by the specific characteristics of the rotational samples that make up the eight sub-samples used to compute the survey estimates.

The September result is more characteristic of the weak state that the labour market has demonstrated for most of this year.

The following graph shows the month by month growth in full-time (blue columns), part-time (grey columns) and total employment (green line) for the 24 months to September 2018 using seasonally adjusted data.

The zig-zag pattern where employment growth has regularly been around zero is evident....

00:37

AFTINET disappointed at Senate majority approval of TPP-11 "IndyWatch Feed Economics.au"

Media Release 17 September 2018 

AFTINET is deeply disappointed that the Senate looks set to pass the TPP-11 implementing legislation, AFTINET Convener Dr Patricia Ranald said today.

Progressive civil society groups, including public health, environment, aid and development groups, churches and unions have played a leading role in exposing the dangers of the TPP-11 in what has been an eight-year public debate.

This has been reflected in the opposition to the TPP-11 from the Greens and Centre Alliance, ALP policy against many TPP-11 provisions, and a fierce internal ALP debate. We thank all parliamentarians who have spoken out against the TPP.

We remain deeply disappointed that the ALP caucus majority decided to support the TPP-11 implementing legislation." 

People are concerned because the TPP-11 is not mainly about traditional trade issues like tariffs. It has an unprecedented 30 chapters, including ones on temporary workers, trade in services, financial services, telecommunications, electronic commerce, competition policy, state owned enterprises and regulatory coherence. Most of these treat regulation as if it were a tariff to be frozen and then reduced over time, and not to be increased.

This structure suits global companies but restricts future governments from regulating in the public interest. Our experience of the global financial crisis, the banking royal commission, escalating climate change and the exploitation of vulnerable temporary workers tells us that governments need to have the capacity to change regulation in the public interest.

The TPP-11 also includes special legal rights for foreign investors to bypass national courts and sue governments in unfair international tribunals if they can argue that a change in law or policy harmed their investment, known as Investor-State Dispute Settlement (ISDS).

The agreement will also mean increased numbers of vulnerable temporary migrant workers from six TPP countries without first testing if local workers are available.

We recogni...

00:33

Hello Budget surplus? "IndyWatch Feed Economics.au"

Gosh. 

The 62% Fe Fines iron ore spot price is now strapping on the booster rockets, being up by some 16 per cent since early July.


At US$73.36/tonne the spot price for iron ore is at the highest level since March 7, with the Aussie dollar also nestling lower. 

Dalian futures strong. 

---

The Aussie jobs report for September is due out at 11.30am Canberra time. 

Debelle argued yesterday that the job advertisements figures may understate the strength of job openings, and more weight might be attributed to vacancy surveys.

The outgoing rotation group this month has a lower employment-to-population ratio than the average for the sample as a whole. 

Therefore despite the massive 44,000 jump in employment last month, there may be some upside risk to today's report. 

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Wednesday, 17 October

16:59

Tourism is still booming, but not just from China "IndyWatch Feed Economics.au"

Swinging Irish

I recently saw another spurt of social media debate about whether Australia is economically speaking 'like Ireland'.

I must confess, I didn't read any of the content - in the two decades since I first came to Oz I've found that reading such bogus international parallels and fighting wars from a dozen years ago has done nothing worthwhile for me (but surely, to each their own!).

Instead, I prefer to look at and interpret the figures myself.

And here's what I note: the Aussie economy is presently growing at about 3 per cent.

And the economy is expected by the Reserve Bank of Australia (RBA) to grow by another 3 per cent next year.

And growth is projected to be another 3 per cent the year after that.

So that's an economy that's growing at about 10 per cent in real terms over three years if the forecasts prove to be anywhere close to the mark.

Now, I've heard all these Armageddon scenarios over the years.

If the turd really did hit the fan - which according to money markets is priced as 'unlikely' - then Australia can cut its own interest rates close to zero, it can engage in its own quantitative easing, and it has its own free-floating currency, which acts as an automatic stabiliser.

Indeed, the Aussie dollar has already turned a neat trick in dropping back to ~71 US cents, which I believ...

13:15

Down, down...share prices are down "IndyWatch Feed Economics.au"

Shareholders blowing their groceries

But for a dime for each time I'd heard that if Buffett invested in Aussie stocks he'd own Woolies.

I'd be almost as rich as the big fella himself!

I haven't much followed that logic.

After all, Wazza could buy Australian shares if he wanted to, and...ah, never mind.

On a personal note, I must confess that I've never liked Coles and would choose Woolies as a place to shop in preference any day of the week. 

But as a Brit raised on Waitrose, Sainsbury's, and M&S I was never particularly enamoured with either of the main Australian brands.

They've generally offered ordinary choice and quality, at not very ordinary prices. 

It's been a long past 11 years for Woolies shareholders with the share price down from around $35 to $27.80 or so at the last count. 

The widely-spruiked 'Buffett stock' meme gathered a serious head of steam in 2014, before the price crashed by 45 per cent as the company ran into trouble.


The journey has been far from a total washout, with dividends arcing steadily higher over the years. 

But then in 2016 Woolies posted its first loss as a listed company of $1.2 billion, leading to the final dividend to long-suffering shareholders for that year being cut by 54 per cent (and the annual dividend slashed almost in half), with a recovery since underway. 

...

11:12

Devils & Details: Live and Unleashed! "IndyWatch Feed Economics.au"

Devils unplugged

Next month you will have the opportunity to see a handful of Australia's brightest financial and economic minds speaking at a live event at The Ivy in Sydney's financial district. 

I'll also be presenting, lol.

Click on the back of Colgo's head below for details!


Alongside Colgo and Scutty, here's some of the panel...


Awesome panellists - as well as Koukie, Whelan, and Michalakis - so it'll be a great event.

Come for the canaps and adult beverages, stay for the bantz.

Tickets $50 - look forward to seeing you there!


10:20

A summary of my meeting with John McDonnell in London "IndyWatch Feed Economics.au"

It is Wednesday and I am reverting to my plan to keep my blog posts short on this day to give me more time for other things. Today, I will briefly outline what happened last Thursday when I met with Shadow British Chancellor John McDonnell in London. As I noted yesterday, I was not going to comment publicly on this meeting. I have a lot of meetings and interactions with people in high office which remain private due to the topics discussed etc. But given that John McDonnell told an audience in London later that evening that he had met with me and that I thought the proposed fiscal rule that Labour has adopted was fine, I thought it only reasonable that I disclose what happened at that meeting. I did not think the rule was fine and I urged them to scrap it and stop using neoliberal constructs.

As background to my view on the matter, the following blog posts (among others) are relevant:

1. British Labour Party is mad to sign up to the Charter of Budget Responsibility (September 28, 2015).

2. The non-austerity British Labour party and reality Part 2 (September 29, 2015).

3. The full employment fiscal deficit condition (April 13, 2011).

4. Seeking zero fiscal deficits is not a progressive endeavour (June 18, 2015).

5. Jeremy Corbyns New Politics must not include lying about fiscal deficits (September 15, 2015).

6. British Labour has to break out of the neo-liberal cost framing trap (April 12, 2017).

7. British labour lost in a neo-liberal haze (May 4, 2017).

8. When neoliberals masquerade as progressives (November 9, 2017).

9. The lame progressive obsession with meaningless aggregates (November 23, 2017).

10. The New Keynesian fiscal rules that mislead British Labour Part 1 (February 27, 2018).

11. The New Keynesian fiscal rules that mislead British Labour Part 2 (February 28, 2018).

12. The New Keynesian fiscal rules that mislead British Labour Part 3 (March 1, 2018)....

08:50

White Rock Wind Farm Public Open Day "IndyWatch Feed Economics.au"

[ Sunday, 21 Oct; 9:00 am to 3:00 pm. ] Local community members are invited to take a bus tour to visit White Rock Wind Farm on Sunday 21st October. Buses will depart from the Old Railway Station Lambeth Street Glen Innes. Buses are scheduled to leave every 20 minutes between 9am and 3pm and the tour will take approximately one hour. The event will align with the [...] full article 

07:59

Why No One Wins a War over the South China Sea "IndyWatch Feed Economics.au"

Thats the title of my latest piece in The National Interest. (over the fold)The central point is brilliantly summed up in this clip from Utopia.

A recent near-collision between Chinese and US Navy destroyers has focused new attention on the potential for conflict in the South China Sea and led to the cancellation of a visit to China by Defense Secretary Jim Mattis.

https://www.stripes.com/news/pacific/mattis-cancels-china-trip-after-chinese-us-navy-destroyers-nearly-collide-1.550089

Chinas naval expansion in the South China Sea puts it in a position to control sea lanes used transport trillions of dollars worth of goods per year, accounting for up to a third of world merchandise trade. China has militarized islands and claimed most of the Sea as its own territorial waters, on the basis of flimsy historical claims and routinely denounced US naval operations in the region as illegal provocations.

Unsurprisingly, the response to Chinese assertiveness from much of the foreign policy community has been to demand a similarly assertive response from the United States. For example, Robert Kagan has argued that the US must resist the extension of a Chinese sphere of influence in its immediate vicinity.

Backing Into World War III

A realist perspective suggests a more cautious approach, and a more careful analysis of the economic issues. A rational assessment suggests that China has far more at stake in this issue than the US.

The crucial, but commonly neglected, fact about trade flowing through the  South China Sea is that the great majority of this trade flows to and from China. That makes control of the South China Sea a crucial national interest for China, since a hostile power could potentially choke off most imports and exports.  But obviously, China has no interest in disrupting its own trade. By contrast, the only direct interest of the US is in the abstract principle of freedom of naval operations.

Moreover, while the US military is far more powerful in global terms, the balance of forces is much more even in regional terms.  Conflict between powers of comparable strength will generally be resolved in favor of the side with the greater commitment.

 

The South China Sea is also important to US allies including Japan and Korea, as it is part...

04:30

What a clapped-out Holden says about the Aussie economy "IndyWatch Feed Economics.au"

I am currently writing to you from the wobbly chair inside my mechanics office.

The reason why Im so uncomfortable is because Im not in the service centre of a major car dealership.

Theres no coffee machine, free Wi-Fi, or couch for me to wait on. Just an office that smells like petrol.

Even though my car is well inside the new car warranty period, I only go to this mechanic.

The same one Ive visited for ten years.

For one simple reason; I trust him. When you regularly find your car driving down bush tracks, history has taught me you need a trustworthy mechanic on your side.

When I pulled up this morning, a car was coming off the bed of a tow truck. Turns out, it was the third tow truck drop-off for the morning.

Then, my mechanic, Travy, told me thats on top of the four tow trucks that pulled up yesterday.

Telling me, This year, you know, its been one of those years where people are spending money fixing the car up, rather than just trading it in and getting another one. All year, Ive been bringing cars back to life, rather than just changing the oil.

And thats exactly the moment the alarm bells sounded in my head

The RBA wants growth

Now, yesterday, I said wed be discussing how most Aussie jobs are reliant on just a few sectors in the economy.

And I will get to that tomorrow.

The problem is, the sectors in the Aussie economy are so interlinked, you cant talk about the impact in one sectorwithout looking at how it will affect another one.

More so, its important to understand how all the sectors work together. Especially when all the official data the mainstream produces tells you the Aussie economy is healthy.

Recent gross domestic product says the Aussie economy is chugging along, and shows a strong growth rate of 3.4%.

Does that make the Aussie economy healthy?

By central banking standards, perhaps.

To them, a healthy economy is one that is expanding. In other words, one where Australias economy continues to grow each year.

But our consumption-based economy means our growth must come from constantly buying things.

The Reserve Bank of Australia (RBA) like to see discretionary spending increasing every year. That includes items like holidays, apparel, electronics, dining out, and so forth.

Same goes with housing finance and new car sales data.

If these two segments are increasing each quarter, it adds to the case that our economy is growing.

...

01:41

Scott Morrison has flagged moving Australias embassy in Israel from Tel Aviv to Jerusalem "IndyWatch Feed Economics.au"

https://www.theguardian.com/australia-news/2018/oct/16/australia-may-move-embassy-in-israel-to-jerusalem

Scott Morrison has flagged moving Australias embassy in Israel from Tel Aviv to Jerusalem, copying Donald Trumps controversial proposal, in a shift that appears timed to coincide with the Wentworth byelection.

Guardian Australia understands moving the embassy was discussed when Malcolm Turnbull was prime minister, and Julie Bishop was foreign affairs minister, given Trumps position but the shift was dismissed out of hand as being not in Australias interests because it would counter the two-state solution, and also upset the relationship with Indonesia.

While government conservatives welcomed the shift, one senior moderate branded Morrisons stance completely mad and predicted it would backfire in the Wentworth contest. This will not pick up one vote.

Morrison acknowledged the previous advice to government when speaking to reporters on Tuesday morning, but declared he was open-minded on moving Australias diplomatic presence to Jerusalem and recognising Jerusalem as the ca...

00:39

Why the TPP-11 benefits corporations at our expense "IndyWatch Feed Economics.au"

17 October 2018: AFTINET convener Dr Patricia Ranalds explainer article about the TPP-11 was published in The Conversation on October 16.

It explains why the deal does not deliver economic gains, gives more rights to corporations at the expense of the public interest and why Labors pledge to make changes after ratification is unlikely to be delivered.

Read it here >> https://theconversation.com/the-senate-is-set-to-approve-it-but-what-exactly-is-the-trans-pacific-partnership-104918

Tuesday, 16 October

20:20

Canberra/Hobart turning into rental disaster zones "IndyWatch Feed Economics.au"

Rentals evaporating in some cities

Despite a record investor boom since 2013 vacancy rates are now falling as investment loans are squeezed harder, with the national rental vacancy rate down from 2.3 per cent to 2.1 per cent over the year to September 2018 according to SQM's latest release. 

In absolute terms, that represents a decrease from 72,955 to 70,172 rentals. 

Every month I'm bombarded with theoretical constructs about how Canberra's land tax experiment won't impact the rental market...and every month the rental vacancy rate falls further, now down from about 2 per cent to just 0.6 per cent since taxes were initially all but doubled. 

I guess the idea was that people in the ACT earn high incomes so homeowners can afford to pay exorbitant taxes, but unfortunately ludicrously high taxes don't discriminate and it's turning out to be a disaster (especially for asset-rich but income-poor homeowners, and now for renters too). 

The ABS rental CPI index has more lag than my nanna's boiler, but more timely industry asking rents indices are now pointing to double-digit rental price increases for the nation's capital. 

Indeed, SQM Research's asking rents index shows the median asking rent for houses increasing by 31 per cent over the past three years.

Plotted below are the capital city vacancy rates reported by SQM Research on a 6mMA basis so that you can see the trends...

19:50

Australian State of New South Wales Mandates Land Registry Shift to Blockchain by 2019 "IndyWatch Feed Economics.au"

The Australian state of New South Wales is set to complete a proof-of-concept for a blockchain-based land registry system by summer 2019

16:30

Australian State Eyes Blockchain Upgrade for Property Transactions "IndyWatch Feed Economics.au"

The New South Wales state government is trialing blockchain tech from ChromaWay as part of a bid to digitize property conveyance by next summer.

11:45

NSW Registry Manager to Test Land Conveyancing on a Blockchain in Australia "IndyWatch Feed Economics.au"

The land registry manager of New South Wales in Australia has partnered with a blockchain technology firm with a view of applying distributed ledger technology to property conveyancing. According to the Financial Review, a proof of concept on a selected number of use cases will be conducted by the New South Wales Land Registry Services Continued

The post NSW Registry Manager to Test Land Conveyancing on a Blockchain in Australia appeared first on CCN

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