Aussie Miracle Results in Rate Hike

We've discuss the Aussie Miracle a few times here. Looks like that trend is continuing. FT Alphaville reports:

Australia on Tuesday became the first G20 nation to raise interest rates since the peak of the financial crisis, as its central bank increased the official cash rate from 3 per cent to 3.25 per cent. (Israel, for the record, became the first non-G20 developed country to raise borrowing costs in the period when it hiked rates in August).

As the FT reports, when raising rates from a 49-year low “emergency” rate, Glenn Stevens, governor of the Reserve Bank of Australia, said economic conditions in Australia had been “stronger than expected”, while measures of confidence had recovered.

Stephens, who cut Australia’s key rate by a record 4.25 percentage points between September 2008 and April, added that the economy is likely to expand “close to trend over the year ahead,” and predicted that inflation will remain near the bank’s target range of 2-3 per cent.

Source: RBA

EconomPics of the Week (7/10/09)

Well, apparently my two week vacation invigorated me as I don't recall posting this many "long" posts (i.e. not just a chart and a link) ever. I hope you all enjoyed, but don't expect it to continue. Especially over the next two weeks as I will be a BUSY traveler for my "day" job.

As a reminder, if you want to keep up with anything interesting I find over the weekend, check out EconomPic on Twitter at www.twitter.com/EconomPic

Investments
Help Jake Invest...
The Ultimate Armageddon Stock
Hedge Funds Continue to Outperform Equities
Hedge Fund Performance Since '02
Q2 Earnings: Front and Center

Inflation
Capacity Utilization vs. Inflation
I'm Impressed with the Fit...
Used Cars and the Inflation / Deflation Tug of War...
ISM Prices Paid Up... End of Deflation Concerns?

Employment
The "Exhaustion Rate" Underestimates the Issue
The "Joys" of the Unemployed Teenager

Other Economic Data
Will the U.S. Become an Export Nation?
Same Stores Sales Suck More Than Anticipated
Consumer Credit (May): Down 4th Straight Month
Wholesale: Sales Up, Inventories Down
Good News Alert! New Orders less Inventory Jumps
The Paradox of Thrift
Contraction is not an Improvement: Services Edition

Global
Aussie Miracle Waning
Japanese Economy "Unexpectedly" Crumbling
German Factory Orders Up 4.4% on the Month... Down 29.4% YoY
British Industrial Production Surprises to Downside
Japanese "Optimism"?

EconomPics of the Week 10/09/09

Not much output this week (the "real job" took precedence).

Labor
10.9 People Unemployed per Job Opening
Labor Force Shrinkage

Consumer Credit
The Dangers of Non-Seasonal Data
Consumer Credit Crumbles

Other Economic Data
Trade Balance Breakdown
ISM Services Show Signs of Expansion
Same Store Sales Rebound.... To 2005 Levels
Is the Long Awaited Inventory Correction About to Spike
U.K. Production Slumps to 1992 Levels
Aussie Miracle Results in Rate Hike

Other
Hedge Funds: Up, Up, and Away
TARP Turns One
Wealthiest Americans Rebounding

Aussie Miracle Continues

Bloomberg details what happens when a workforce of around 11 million (~1/13th that of the United States) that focuses on commodities is located near a BOOMING China that happens to be in need of those commodities:

Australian employers unexpectedly added workers in October, pushing the nation’s currency to its highest level this year on speculation the central bank will raise interest rates for a record third straight month.

The number of people employed rose 24,500 from September, the statistics bureau said in Sydney today. The median estimate of 20 economists surveyed by Bloomberg was for a decline of 10,000. The jobless rose to 5.8 percent from 5.7 percent.

Australia’s economy is expanding with “less spare capacity than earlier thought likely,” according to the central bank, as Chinese-led demand for resources spurs companies such as Chevron Corp. to hire workers.

Total employed persons flat year over year during one of the worst global economic downturns in modern times... pretty, pretty, pretty good.

Source: ABS

EconomPics of the Weeks (11/13/09)

Economic Data

United States
The "Paradox of Deleveraging"
Civilian Hours vs. Real GDP
Consumers Don't Enjoy Unemployment
Trade Deficit Jumps in September
The State of States: They're Broke
Spending Down + Deficit Up = Not Good

Foreign
Eurozone GDP Breaks Through Zero... Concerns Still There
Aussie Miracle Continues
China is Ripping... Bears are Smoking Dope
Germany: Improving Economy

Long Bonds
Where are Long Bond Yields Going?
Where are Long Bond Yields Going: Late 70's / Early 90’s Edition
Just One Super-Secular Mean Reversion?

Other
Will There be Appetite for Another Stimulus Plan?
The Job Market and Equities

U.K. Production Slumps to 1992 Levels

More traveling (halfway through a three week world tour) this afternoon, BUT will try to post TODAY (not tomorrow) on the upcoming consumer credit and Treasury budget release. In the meanwhile, some "yesterday's news" that seemed to have been lost in yesterday's Aussie rate hike, dollar cliff dive, equity / commodity spike.

Things in the U.K. are not only NOT getting better, but they are still deteriorating (in some cases to 17 year lows). Bloomberg details:

U.K. manufacturing production unexpectedly slumped in August to the lowest level since 1992, a sign the economy is struggling to shake off the recession.

Factory output dropped 1.9 percent from the previous month, the Office for National Statistics said today in London. Economists predicted a 0.3 percent increase, according to the median of 26 forecasts in a Bloomberg News survey. The index of manufacturing fell to 87.8, the lowest in 17 years.

Bank of England policy makers have cautioned that the credit squeeze and weak demand at home and overseas may hamper the economy’s escape from the worst recession in at least a generation. The central bank will keep up its 175 billion-pound ($280 billion) asset-purchase plan this week as officials gauge the strength of the recovery, economists say.

The data are “shockingly bad,” said Alan Clarke, an economist at BNP Paribas SA in London. “This starts to concern us that we’re losing momentum a bit earlier than we’d feared. We’re out of recession but it’s far from good growth yet.”

But, who cares about the actual economy when equity and home prices are up? The result, expectations from the Nationwide survey show serious signs of optimism.



But, will this optimism be enough to lead the actual economy to those heights seen in financial / asset markets?

Source: Stats.Gov.UK

EconomPics of the Week (Love is in the Air) Edition

Economic Data
U.S. Consumer Keeps Chugging Along
More on Retail
The Death of the Workforce
Women Taking Over the Workforce
Wholesale Inventories and Q4 GDP Revisions

Global Data
Euro Zone GDP Disappoints
Loose Money and The Aussie Surge
Global Trade Continues to Bounce Back to the Old Norm

Asset Classes
Hedge Funds Off to a Slow Start in '10
What Mortgage Payment?
Market Recap (2/08/10)

And in honor of Valentine's Day, the best scratchy voiced, live, hotel played, acoustic, cover love song ever.

Loose Money and The Aussie Surge

As I've stated before, Australia is:

A commodity driven economy that has a close proximity to one of the world's fastest growing / largest commodity importing economy (China).

Add (excess) liquidity in that importing country (per Marketwatch):

Chinese banks extended loans amounting to 18.5% of the full-year lending target in January, underpinning rapid growth in the money supply, while factory input costs and wholesale prices rose more than expected, according to the data.

The People's Bank of China said lending by the nation's banks totaled 1.39 trillion yuan ($203.5 billion) during the month, more than three times the 379.8 billion yuan extended in December. The figure was about the middle of a range expected in analysts' forecasts.

And you get some magical results (Bloomberg details the latest):

Australian employers added the most workers in more than three years in January, sending the currency surging on speculation the central bank will resume its record round of interest-rate increases.

The number of people employed rose 52,700 from December, more than three times the 15,000 median estimate of 21 economists surveyed by Bloomberg News. The jobless rate fell to an 11-month low of 5.3 percent from 5.5 percent, the statistics bureau said in Sydney today.

The biggest hiring boom in five years is increasing pressure on Reserve Bank of Australia Governor Glenn Stevens to resume raising borrowing costs to prevent a surge in wages feeding inflation. Traders doubled bets the bank will raise the benchmark lending rate by a quarter point to 4 percent next month, adding to similar moves in December, November and October.

“It will concern the Reserve Bank that the unemployment rate has peaked at a very low rate,” said Helen Kevans, an economist at JPMorgan Chase & Co. in Sydney. “Imagine what’s going to happen later this year” to inflation and wages when a forecast surge in mining investment intensifies, she said.

Thus, the remarkable fact that Australia never really suffered an employment downturn during what was a global economic crisis, especially relative to the rest of the developed world.

Source: ABS

EconomPics of the Week (July 4th Weekend)

Happy 4th of July to all you Americans out there... if you want to keep up with anything interesting I find over the holiday weekend, check out EconomPic at www.twitter.com/EconomPic

Economic Data
Birth / Death Model Has Added 800,000 Jobs
Unemployment Jumps... Can We PLEASE Forget About Inflation
"Mother of All Inventory Corrections"
Manufacturing ISM Continues Decline
ADP Job Losses at 473,000 in June
Consumer Diffidence
Home Prices are "Less Worse"
Top Bank Losses
R.I.P. U.S. Consumer

Global
The Aussie "Miracle" Continues
Japan: 2.3 Applicants for EVERY Job Opening
U.K. Post Largest GDP Drop in 50 Years
Japanese Industrial Production Jumps, But Still Down 30%

Assets / Markets
What Goes Down, Must Come Up
Auto Bankruptcy = Poor Marketing

Other
The State of Obama
"More Than Meets the Eye" at the Box Office
Freddie Mac Delinquencies Increase at Increasing Rate

The Aussie Miracle Continues

As I've stated before, Australia is:

A commodity driven economy that has a close proximity to one of the world's fastest growing / largest commodity importing economy (China).

Bloomberg details the results:

Australian job growth capped the best quarter in almost four years in June, stoking the nation’s currency and stocks and heightening odds that the central bank will have to resume boosting interest rates.

The 45,900 increase last month exceeded all 22 forecasts in a Bloomberg News survey, a statistics bureau report showed in Sydney. The jobless rate held at 5.1 percent from the revised reading for May, marking the first time it’s below Japan’s level since at least 1978, according to data compiled by Bloomberg.

A strengthening job market may escalate pressure on inflation, which central bank Governor Glenn Stevens said two days ago is likely to accelerate above his target range. Today’s report is also a boost to Prime Minister Julia Gillard, who plans to call an election in coming months and has already pulled her party ahead of the opposition in opinion polls.

And something as removed as anything you'll hear in the U.S. these days:

“If you are worried about inflation, these numbers are telling you there’s very limited spare capacity in the labor market, you are approaching full employment,” said Su-Lin Ong, senior economist at RBC Capital Markets Ltd. in Sydney.

Source: ABS

Aussie Employment "Surprise" to Upside

Bloomberg details the good:

Australian employers unexpectedly added workers in July, supporting the central bank’s view that the economy is rebounding faster than it predicted six months ago.

The number of people employed rose 32,200 from June, the statistics bureau said in Sydney today. The median estimate of 18 economists surveyed by Bloomberg was for a decline of 18,000. The jobless rate held at 5.8 percent.

Central bank Governor Glenn Stevens kept the benchmark interest rate at a half-century low of 3 percent this week for a fourth month and said the economy is “stronger than expected a few month ago.” Woolworths Ltd., the nation’s largest retailer, is among companies planning to hire extra workers. Job vacancies dropped in July at a slower pace, a report showed on Aug. 3.

And the bad:

The number of full-time jobs dropped 16,000 in July and part-time employment increased 48,200, today’s report showed.

In aggregate, we see that the number of full time positions has declined year over year for the sixth straight month, BUT the decline looks to have finally slowed...

For now at least. Back to Bloomberg:

“The leading indicators of employment have shown signs of recovery,” Helen Kevans, an economist at JPMorgan Chase & Co. in Sydney, said ahead of today’s report. “But we’re really interested to see what happens in the second half of the year as the government’s stimulus spending starts to abate.”

And that is the key... what happens after the stimulus?

Source: ABS.gov

EconomPics of the Week (7/9/10)

I’m going to claim a solid week at EconomPic. I liked my posts (especially considering the shortened week / loads of travel) and made some pretty nice $$ / got lucky combining this post and this post.

Asset Classes
Things That Make You Go Hmmm.....
Earnings Jump... Cause for Economic Concern?
Hedge Funds Remain Under Pressure
Equities for the LOOOOONNNNGGGG Run

Economic Data
How is Spending Still Strong?
Consumer Credit Freefall
ISM Services: Slow Growth

Employment
The Employment Depression
The Aussie Miracle Continues
Where are those jobs at?
Bron Bron... a Go Go

And in honor of some good news coming out of Asia and US markets... Descendents with Hope (please tell me I have one reader who grew up listening to these guys):

EconomPics of the Week (8/7/09)

If you want to keep up with anything interesting I might find, check out EconomPic at www.twitter.com/EconomPic

Economics
U.S.
Unemployment Rate Drop = Decline in Labor Force
Five Years of Real GDP per Capita Lost
Real GDP per Capita Redux
Less Unemployed, but More Unemployed Longer
Unemployment Down to 9.4%
What's Another 370K Jobs Anyhow?
July Same Store Sales
Consumption Stabilizing... Now What
Manufacturing Contracts for 18th Straight Month
Services Declining at Slightly Faster Rate

Global
"China is Leading the Way"
UK Producers Price Index Surprises to Upside
Aussie Employment "Surprise" to Upside
"Japanese Wages in Record Plunge"
Decline in Energy Drives Euro PPI to Largest Drop in 13 Years

Asset Classes
Corporate Bonds Rockin'
Ford Ends 18 Month Skid
Sovereign Wealth Fund Breakdown
Hedge Funds are "en Fuego"
AIG Soars... Still Down 96% Year over Year
Income Down, Savings Up = Consumption Down = Stalling Economy

Other
Economics of Steroids

Aussie Miracle Waning

The miracle of positive GDP and strong retail sales may be waning as the broader global slowdown continues to impact the Australian labor market (though to a lesser degree than expected).

RTT News reports:

Unemployment in Australia increased in June, but the figures were not as bad as most economists expected.

The Australian Bureau of Statistics reported Thursday that the unemployment rate rose 0.1 percent from the month before to 5.8 percent, the highest level since October 2003.

Most economists had forecast a jobless rate of 5.9 percent.

The number of employed Australians decreased by 21,400 in June, also short of economists' predictions of a loss of 25,000. Full time employment declined 21,900 to 7,61 million, from the May number of 7.63 million.

The number of Australians working part time rose by just 400 to 3.15 million.

Australia's workforce participation rate, which measures the proportion of working age people with jobs or actively seeking work fell a seasonally adjusted 65.3 percent in June from 65.4 percent in May.

Source: ABS.GOV

The Aussie "Miracle" Continues

Bloomberg reports:

Australia’s retail sales climbed twice as much as economists estimated in May as consumers spent more at department stores and restaurants.

Spending gained 1 percent from April, when it rose 0.3 percent, the Bureau of Statistics said in Sydney today. That compares with a median estimate for a 0.5 percent increase in a Bloomberg survey of 20 economists.

Australia was one of the few major economies, along with China and India, to expand in the first quarter as government cash handouts and the lowest interest rates in 49 years spurred demand. Retailers David Jones Ltd. and JB Hi-Fi Ltd. have both raised their profit forecasts because of a pickup in sales.

Source: ABS.gov