The iPhoneX economic boom

Thu, 11 Jan 2018  |  

Every man, woman and their dog was blown away with the massive 1.2 per cent rise in Australian retail sales in November. It was enough to spark a sell-off in the bond market and a jump in the Aussie dollar.

The ABS noted in the release that the surge was influenced by the release of the iPhoneX which at around $1,500 a pop, was a big enough issue to mention.

Of course, the iPhoneX was released around the world at the same time in November which prompted me to have a look at the retail sales results in other parts of the world – to see if the iPhone effect was important elsewhere or just confined to Australia.

And guess what?

Retail sales in November were unexpectedly strong everywhere that matters, and by a large margin and the bulk of the result was driven by a surge in sales of electronic goods.

Have a look at the actual retail sales in November versus expectations:

US 0.8%            versus 0.3% expected: Difference 0.5%
UK 1.1%            versus 0.4% expected: Difference 0.7%
Canada 1.5%     versus 0.3% expected: Difference 1.2%
Eurozone 1.5% versus 1.3% expected: Difference 0.2%
Japan 1.9%       versus 0.7% expected: Difference 1.2%

Average difference 0.8%

Which puts Australia’s result in context

Australia 1.2% versus 0.4% expected: Difference 0.8%

What do you know?

US retail sales are out Friday – will there be a snap back? All eyes will be watching as it could be the lead for the global economy and markets.

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The house price weakness is not confined to Sydney.

In Melbourne, the Corelogic data shows house prices topping-out. Prices are down 0.3 per cent from the December 2017 peak which, to be sure, is not a large decline after the stunning increases of previous years, but a fall it is.

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Of some concern, Australia’s unemployment rate remains at 5.5 per cent – it actually ticked up from 5.4 per cent the prior month. Interestingly, and something less favourable, is the fact that the unemployment rate has been below 5.5 per cent for just two months (October and November 2017) in the last four and half years. Where is that 5 per cent or lower full-employment target everyone reckons we are near?

What’s more interesting, and a sign of the policy sloth that Australia is enduring at the moment, is that around the world, unemployment rates are falling and are impressively low.

Sure each country will have its quirks but have a look at our 5.5 per cent against these countries.