Key insights from the week that was. As is tradition in Australia, the Federal Government delivered its mid-year economic and fiscal outlook in the lead up to Christmas. As anticipated, this update highlighted a troubling combination of fading revenue windfalls and persistent strength in spending across critical services, infrastructure, cost-of-living measures and state/local grants. While […]

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The OCR looks set to end 2025 at 3.25% – lower than previously thought. We continue to see a 50bp cut in February but now think it will be followed up with 25bp cuts in April and May 2025. GDP printed sharply lower in Q2 and Q3 2024 – falling a cumulative 2.1%. The RBNZ […]

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The RBA’s language change this week revealed a change in thinking driven by shifts in the data. But some data surprises might just be head fakes. Something happened between 28 November and 9 December to shift the RBA’s thinking. The first of these dates marked a speech by Governor Bullock that can only be described […]

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Key insights from the week that was. While the RBA’s decision to leave the cash rate unchanged at 4.35% was widely anticipated, there were noteworthy shifts in language in the decision statement. Most poignant was the removal of the “not ruling anything in or out” guidance that stood in place for the much of this […]

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The RBA remains on hold with the cash rate kept at 4.35%. But the Board is gaining confidence in its own forecasts that inflation is coming down. As expected, the RBA Board held the cash rate steady at 4.35% following its meeting this week. The Board remains concerned that underlying inflation remains above target, with […]

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Weak household income is being masked by an expansion in non-market care economy. The implications for productivity are often misunderstood, meaning the end of that transition could come as a shock to some. Australian households have been hit by the largest real income shock since the Great Depression. And, although tax cuts and declining inflation […]

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Key insights from the week that was. Australia’s Q3 National Accounts disappointed expectations with GDP up just 0.3% (0.8%yr) as the gap between public and private demand widened – the latter now stalled for six months. While partly explained by the ‘reallocation’ of electricity spending by households to the government through energy rebates, the majority […]

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The Australian economy grew by a sluggish 0.3% in the September quarter, with increased government spending driving all of the gain. Private demand (spending by consumers and businesses) flatlined with household consumption and new business investment surprising to the downside, both holding flat over the quarter. The Australian economy grew by a sluggish 0.3% in […]

The post First Impressions: Australian National Accounts, September Quarter 2024 appeared first on Action Forex.

The shift to a more services-based economy increases economy-wide depreciation rates, and so the need to invest. Higher average interest rates – and economy-wide profit shares – are among the likely results. An important reason for our house view that the global structure of interest rates will be higher going forward than it was pre-pandemic […]

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Businesses remain very upbeat about the year ahead. There are also some signs that current conditions are gradually improving. Key results (November 2024) Business confidence: 64.9 (Prev: 65.7) Expectations for own trading activity: 48.0 (Prev: 45.9) Activity vs same month one year ago: -9.7 (Prev: -10.5) Inflation expectations: 2.53% (Prev: 2.83%) Pricing intentions: 42.2 (Prev: […]

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The RBNZ cut the OCR by 50bps to 4.25% at its final policy meeting for this year. The RBNZ’s OCR forecast profile was revised down as expected and now shows the OCR at 3.55% at the end of 2025. The Governor indicated the forward track was consistent with a 50bp cut at the February MPS […]

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Retail sales fell 0.1% in the September quarter, a smaller drop than we expected. Retail spending remains soft, but is likely to firm over the coming months. September quarter retail sales (volume of good sold): -0.1% (Prev: -1.2%) Westpac f/c: -0.5%, Market: -0.5% September quarter nominal retail sales: -0.7% (Prev: -1.4%) While not quite as […]

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Key insights from the week that was. In Australia, the RBA’s November Meeting Minutes provided a deep dive into the Board’s baseline views and assessment of risks. Chief Economist Luci Ellis subsequently discussed a number of noteworthy developments, one being the statement that the Board “would need to observe more than one good quarterly inflation […]

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We have revised our view of the most likely scenario for the path of the RBA’s cash rate, pushing out the start date of the rate-cutting cycle from February to May, but more front-loaded than previously assumed. We have revised our view of the most likely scenario for the path of the RBA’s cash rate, […]

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Key insights from the week that was. In Australia, the latest Westpac-MI Consumer Sentiment Survey provided another encouraging update on the health of the consumer. An impressive 11.8% rebound over the past two months has left the headline index at 94.6, the strongest reading in over two-and-a-half years and well within striking distance of a […]

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Wages growth has peaked and started declining. At current rates, even quite low productivity growth would be compatible with inflation being sustained at target. So why is the RBA so worried? The Wage Price Index increased 0.8% in the September quarter and 3.5% over the year. This was in line with our expectations but – […]

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Employment: +15.9k (from +61.3k). Unemployment Rate: 4.1% (from 4.1%). Participation Rate: 67.1% (from 67.2%). In October, employment rose by +15.9k (0.1%), slightly below Westpac’s forecast of +20k and under the market consensus forecast of +25k. This marks the softest monthly increase in employment since May, when a modest decline was reported, and a departure from […]

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First Impressions: The WPI rose 0.8% in the September quarter, on par with Westpac’s forecast and below the market consensus of 0.9%. The market range was from 0.8% to 1.0%. On an annual basis, wages are up 3.5%yr, down from 4.1%yr in June and the peak of 4.2%yr in December 2023. Wage inflation has continued […]

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We expect the RBNZ will cut the OCR by a further 50bps to 4.25% at its November Monetary Policy Statement meeting. The RBNZ will likely indicate increased confidence that pricing and wage setting behaviour will quickly normalise now that annual CPI inflation is close to 2%. The RBNZ’s projections will likely suggest further OCR cuts […]

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Near term inflation expectations have dropped back, but longer-term expectations are up. Inflation expectations One year ahead: 2.05% (Prev: 2.40%, down 35 points) Two years ahead: 2.12% (Prev: 2.03%, up 9 points) Five years ahead: 2.24% (Prev: 2.07%, up 17 points) Ten years ahead: 2.19% (Prev: 2.03%%, up 16 points) The latest survey of inflation […]

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