Chinaustralia Economy Jumps

Bloomberg details:

Manufacturing in China grew at a faster pace in August after the weakest performance since early 2009 in July, signaling that the economy’s slowdown is stabilizing. The purchasing managers’ index rose to 51.7 from 51.2, exceeding forecasts, a government-backed report showed.

Not surprising that news was strong out of Australia (per the AP):

Investors were also cheered by figures showing that Australia's economy grew a seasonally adjusted 1.2 percent in the April-June quarter as demand from China and elsewhere in Asia boosted exports of iron ore and other commodities. The rise, the highest for three years, was more than the 0.9 percent anticipated in the markets.

Source: Haver

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

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

Is Australia in Full Recovery Mode?

The Australian details:

Australia's unemployment rate fell to a seasonally adjusted 5.5 per cent in December from 5.6 per cent in November.

Total employment rose by 35,200 to 10,906 million in December, the Australian Bureau of Statistics said.

Economists on average had expected an unemployment rate of 5.8 per cent in December, with the number of employed up 10,000.

The number of people in full-time work rose 7300 to 7.64 million in December, from 7.63m, while the number of people in part-time work rose 27,900 to 3.27m from 3.24m.

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

Source: ABS

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

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

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

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

The "Miracle" Down Under

WSJ reports:

Australia's A$1.1 trillion economy grew in the first quarter of 2009, defying a capitulation in global trade and crunched confidence, and for now sidestepping a technical recession.

Australia's economic slowdown so far appears mild compared with other developed economies but any jubilation is set to be brief as Australia's quarter of growth hinged almost entirely on a positive shift in the country's trade accounts, offsetting a massive slump in business investment and profits, with a terms of trade plunge set to weigh heavily on the economy through 2009.

The average measure of gross domestic product rose 0.4% in the first quarter of 2009 from the fourth quarter of 2008 and rose 0.4% from a year earlier, the Australian Bureau of Statistics said Wednesday.

Source: ABS.GOV.AU

Australia's Frozen Job Market

While Australia's economy has done relatively well during the crisis due to their commodity exports to China, their job market is apparently as dreadful as ours. The Age details an index that I had not been previously aware of:

Skilled vacancies dropped 7 per cent in May, according to the latest Government data, easing the pace in declines for the nation's jobs outlook.

The slump follows a 8.9 per cent fall in the April reading of the index, compiled by the Department of Education, Employment and Workplace Relations. It marks the 18th consecutive month of falls, as the nation struggles with weak demand for workers triggered by the recession after an earlier shortage of skilled workers put a lid on hiring at the height of the economic boom.

The DEWR vacancies index, compiled from job ads in major metropolitan newspapers across the country, is a leading indicator of the labour market.

"The monthly fall in skilled vacancies was widespread, with decreases evident across most occupations," DEWR said, with medical and science technical officers down by 20 per cent.

Taking a look at this job index by sector and sub-sector (in year over year terms) we see that no area has truly been safe (with the interesting exception being marketing and advertising).



Source: Workplace.Gov.AU

Good News Alert! Australia May Show Positive GDP

We had to travel around the world for some good economic news, but here it is. Business Day reports:

Companies ramped up plans for spending in the final months of last year, providing enough momentum for the economy to trigger a fresh look at 2008 growth estimates.
Business spending expectations for the three months to the end of December skyrocketed 6%, to $24.8 billion, seasonally adjusted, from an upwardly revised 1.6% rise in the September quarter, the Australian Bureau of Statistics said.

''This will provide vital support to fourth quarter GDP growth,'' said ANZ economist Katie Dean. ''Australia may well avert a negative read.''

''Today's data will prompt forecasters to rush to upgrade expectations for fourth quarter GDP growth,'' she said.

Source: ABS.gov