– NOVEMBER 2017 INSIGHTS BY THE CURVE TEAM –
- The RBA once again elected to leave the cash rate on hold at a record low 1.50% following their November Board meeting.
- Governor Lowe remained optimistic in the accompanying statement as data largely continues to support the RBA’s central forecasts.
- Inflation continues to miss the mark domestically and this looks to delay any change in policy by the RBA.
- The consumer continues to be a cause for concern for the RBA following yet another poor retail sales number.
Australian Economic Highlights
- Following a weather effected slowdown in Q1, Growth improved in the second quarter with the economy expanding by 0.8%. The Australian economy now holds the record outright for the longest run of growth without a recession at 104 quarters.
- CPI continued to disappoint, the headline figure only lifting 0.6% for Q3 with falls in fruit and vegetable and telecommunications prices contributing largely to the weakness. The RBA’s preferred measure, core inflation also remained below the band at 1.88% after a quarterly increase of only 0.35%.
- Employment data continued to reflect strong labour market conditions with total job growth of 54,200 for August, coming in well above expectations. The unemployment rate remained unchanged at 5.6% coinciding with a 0.2% lift in the participation rate.
- Following September’s flat print, ANZ job ads rebounded this month with the number of advertisements lifting 1.4%. Employment conditions continue to show strength.
- The NAB business conditions index hit a record high in October, touching 21 driven by improved trading conditions and profitability. Business confidence remained steady at 8 as uncertainty around margins causing the disparity. Interestingly forward orders eased this month painting a more accurate picture of the strength in the non-mining sector.
- Consumer confidence continues to languish as weak wages growth and tightening credit standards continue to impact family finances. The ongoing weakness is starting to show up to a greater degree in consumption data.
- Retail sales continue to be a cause for concern, printing flat for September following a 0.5% slump in August and 0.3% in July.
- Housing finance continues to be impacted by the macro prudential restrictions imposed by the council of financial regulators. The downward trend in dwelling finance commitments continued, falling 3.6% on seasonally adjusted terms with investment housing also dipping 0.5%.
- A lift in iron ore prices month helped lift Australia’s trade surplus for September, the surplus lifted to $1745m in seasonally adjusted terms. The uplift was also assisted by an increase in goods exports with non-rural goods exports lifting $600m.
- Building approvals continue to trend upwards. Following the 0.4% uplift in August, the number of buildings approved rose 1.8% in September. The lift looks like it is largely attributed to the 2.6% increase in private sector dwellings (excluding houses).
- Motor vehicle sales dipped following a 0.3% increase in August, falling 0.5% for September.