RBA is starting to see a stronger economy

Tue, 04 Mar 2014  |  

After the release of the labour force and capital expenditure data in recent weeks, an interest rate hike in March was always going to be off the table.

My forecast from five months ago for a hike in March, albeit wrong, left me with a profit on trading given the market was pricing in an interest rate cut for all of that time. So a wrong call that makes money? I'll take that.

The RBA announcement today highlighted its new found view that "growth is expected to strengthen, helped by continued low interest rates and the lower exchange rate". Unlike many in the market, the RBA is clearly looking at the stellar housing activity (prices and construction), solid consumer demand, strong export growth, improving global conditions and a pick up in inflation to support this view.

These trends seem set to gain further momentum in the months ahead and if they get too strong, the RBA will have a difficult job reigning in persistent inflation pressures.

On the current soft labour market conditions, the macroeconomic management worry is probably quite low. Even the drover's dog knows employment lags the business cycle which make the recent pick up in activity a shoo-in as a precursor for a pick up in employment in the not too distant future. Be patient.

As far as the Capex data go, the concentration of the slump in mining investment is well understood. It would be an issue of concern if the non-mining investment outlook wasn't picking up or if exports, consumer demand or house building were not marching higher.

The fact that these areas of the economy are strong should be juxtaposed against the mining investment slump.

Bottom line GDP growth looks to be on track for 3.5 per cent or more by the end of 2014 and with it, an era of solid job creation beckons.

The RBA has in the past tended to be a little cumbersome in recognising important changes on momentum in the economy, but this time, it looks to be alert to the changes coming through. With that, it is reasonable to expect a more hawkish tone to its rhetoric in the not too distant future and then an interest rate rise within the next few months.

comments powered by Disqus

THE LATEST FROM THE KOUK

CLIMBING THE COVID MOUNTAIN

Wed, 29 Jul 2020

TEN ECONOMIC STEPS THAT FORM A PATHWAY TO THE TOP

THEKOUK and EVERALDATLARGE OUTLINE A WAY FOR THE PEOPLE OF AUSTRALIA TO CREATE AND MAINTAIN SUSTAINED PROSPERITY

Covid19 has opened a door for Australians to positively accept significant changes that will lead to a shared good. This rare opportunity enables us to achieve sustainable economic and social goals that create a new ‘normal’ as our way of life.

These Ten Steps are presented as non-partisan recommendations to the Australian Parliament in the firm belief that, if they embrace them, the Australian economy and society will be greatly enhanced after the Covid19 pandemic has passed.

*A job for you if you want one.
A significant increase in part time and casual employment can be created that will enable you to enjoy a more creative and peaceful lifestyle and to live longer and better. The traditional age at which you would have been expected to retire will become obsolete as a result. An access age for pension and superannuation will become your choice. This will enable you to remain in paid work for as long as you want to, on a basis that you choose, while boosting the productivity and growth of Australia.

*You will get wage increases that will be greater than your cost of living.
A demand for enhanced innovative skills at all levels of employment will be created as the economy grows in strength, thereby enhancing your stature in the workforce and enabling executive salaries and bonuses to drop to levels that are accepted as justifiable by employees, shareholders and customers.

The misplaced objective of the government of delivering a surplus, come hell or high water, has gone up in smoke

Tue, 07 Jan 2020

This article first appeared on the Yahoo Finance web site at this link: https://au.finance.yahoo.com/news/the-governments-test-in-2020-220310427.html   

---------------------------- 

The misplaced objective of the government of delivering a surplus, come hell or high water, has gone up in smoke

For many people, the cost of the fires is immeasurable. 

Or irrelevant. 

They have lost loved ones, precious possessions, businesses and dreams and for these people, what lies ahead is bleak.

Life has changed forever.

As the fires continue to ravage through huge tracts of land, destroying yet more houses, more property, incinerating livestock herds, hundreds of millions of wildlife, birds and burning millions of hectares of forests, it is important to think about the plans for what lies ahead.

The rebuilding task will be huge.

Several thousands of houses, commercial buildings and infrastructure will require billions of dollars and thousands of workers to rebuild. Then there are the furniture and fittings for these buildings – carpets, fridges, washing machines, clothes, lounges, dining tables, TVs and the like will be purchased to restock.

Then there are the thousands of cars and other machinery and equipment that will need to be replaced.