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Economic Indicators

Categories

  1. Interest rates 
  2. GDP 
  3. Consumer price index
  4. Consumer sentiment
  5. Labour market

Interest Rates

Following the April 2014 Reserve Bank meeting, the cash rate remained on hold at 2.50 per cent. Governor Glenn Stevens stated that although growth in 2013 was below trend, there could be prospects for growth stemming from a continued rise in exports, low interest rate environment and improved business sentiment. In its press release, the RBA noted that consumer demand has firmed and foreshadows continued solid growth in the housing market and dwelling construction favoured by the currently low interest rates. In addition, inflation is expected to remain within the 2-3 per cent target over the next two years. However, economic growth will continue to have headwinds from mining investment, planned fiscal restraint, and the deteriorating labour market outlook. As such, given both upside and downside risks, the Bank believes that rates are likely to be stable in the near term.

Source: Reserve Bank of Australia

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GDP

The Australian economy grew by 0.7 per cent over the quarter in trend terms and 0.8 per cent in seasonally adjusted terms. As such, the economy grew by 2.7 per cent over the year compared to 2.3 per cent in the previous quarter in trend terms, driven by the Mining (up 1.2 per cent), Rental, hiring and real estate services (up 4.2 per cent) and Manufacturing (up 1.5 per cent) industries. Victoria’s State Final Demand (SFD) grew by 1.7 per cent over the year - the largest annual increase since June 2012 and rose 0.3 per cent over the December quarter 2013.

 

ABS cat. 5206

 

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Consumer Price Index

The annual rate of inflation for Melbourne rose to 2.6 per cent in the December quarter of 2013 from 2.4 per cent in the September quarter, on par with the national level of inflation.  Over the quarter, the highest contribution to both national and Melbourne inflation was from recreation and culture, which rose by 2.4 per cent in Melbourne and 2.1 per cent nationally. Housing in Melbourne grew by 0.2 per cent during the December quarter compared to a growth of 4.7 per cent in the previous quarter. This relatively marginal growth is a result of an increase in new dwelling purchases being offset by a decrease in utilities.

Source: ABS cat. 6401.0

Quarter  Melbourne CPI (All Groups) Australia CPI (All Groups)
Sep-2012

101.6

101.8

Dec-2012

102.0

102.0

Mar-2013

102.4

102.4

Jun-2013

102.6

102.8

Sep-2013

104.0

104.0

Dec-2013

104.8

104.8

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Consumer Sentiment

The National Westpac - Melbourne Institute Index of Consumer Sentiment rose slightly by 0.3 per cent to 99.7 in April 2014, after having trended downwards over the past ten months. Sentiment surrounding family finances improved the most by 6.7 per cent for the current term and 2.2 per cent for the next twelve months, while unemployment expectations declined by a smaller margin compared to the previous month owing to positive news on jobs created in the labour market. The Time to Buy a Dwelling component decreased by 3.9 per cent over the month, while sentiment around spending declined by 8.7 per cent despite the recent improvement in trend for consumer spending.

The sentiment index for Victorian consumers fell by 7 per cent to 91.4 - its lowest level in more than two years. This decline was a result of decreases in all component indices except for the current family financial conditions index. The Victorian Time to Buy a Dwelling Index declined by a sharp 18.9 per cent to 88.7 in April, continuing its downward trend since the beginning of this year.

Source: Westpac - Melbourne Institute

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Labour Market (Victoria)

Victoria’s unemployment rate in trend terms fell further over March 2014, to 6.5 per cent - its highest level since January 2002.  In seasonally adjusted terms, the unemployment rate remained flat at 6.4 per cent during the month. Over the same period, the national rate of unemployment in seasonally adjusted terms fell to 5.9 per cent from 6.0 per cent, however, unemployment in trend terms increased to 6.0 per cent from 5.9 per cent remaining at the highest level in more than ten years. Australia added 18,100 new jobs over March in seasonally adjusted terms, however, full-time employment decreased by 2.7 per cent while the number of part time workers joining the labour force increased by 11 per cent.

According to the economic outlook by the Australian Government Treasury, national unemployment is expected to peak at 6.25 per cent in June 2014 before stabilising at this level through to June 2015.

Source: ABS cat. 6202.0,  Australian Government Treasury

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