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Economic Indicators

Categories

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

Interest Rates

The cash rate remained on hold at 2.50 per cent for the 12th consecutive month, following the Reserve Bank meeting in August 2014.  Headline and underlying inflation have increased over the past quarter, given the recent softening of the Australian dollar. However, the Reserve Bank expects inflation to remain within the target range on the back of slower wager growth in the near term. Economic growth was better than expected in the previous quarter, which was essential for the recovery of the labour market. There has been reasonable improvement in labour market indicators; however the RBA believes that it will take some time to uplift the unemployment rate at current levels. Based on the current environment, the RBA expects rates to remain stable over time.

Source: Reserve Bank of Australia

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GDP

The Australian economy grew by 0.8 per cent over the quarter in trend terms compared to 0.9 per cent in the previous quarter. As a result, the economy grew notably by 3.2 per cent over the year compared to 2.8 per cent in the previous quarter in trend terms. It also grew in seasonally adjusted terms by 1.1 per cent. The growth in this quarter, in seasonally adjusted terms, was mainly driven by mining (up 8.6 per cent), financial and insurance services (a 2.8 per cent increase) and construction (a 3.0 per cent rise). Victoria’s State Final Demand (SFD) in seasonally adjusted terms also grew by 1.8 per cent over the year and rose 0.7 per cent over the March quarter 2014.

 

ABS cat. 5206

 

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Consumer Price Index

The annual rate of inflation for Melbourne increased significantly for the fourth consecutive quarter to 3.2 per cent in June quarter 2014 compared to 2.8 per cent in the previous quarter. This is higher than the national level of inflation of 3.0 per cent. The largest increases to Melbourne’s CPI over the quarter were from clothing and footwear (+4.4 per cent), health (+2.8 per cent rise) and, alcohol and tobacco (+2 per cent). Of the eight capital cities, the housing sub-component for Melbourne rose the most by 1.3 per cent over the quarter due to the increase in new dwelling purchases by owner-occupiers.

Source: ABS cat. 6401.0

Quarter  Melbourne CPI (All Groups) Australia CPI (All Groups)
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

Mar-2014

105.3

105.4

Jun-2014

105.9

105.9

 

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Consumer Sentiment

The National Westpac - Melbourne Institute Index of Consumer Sentiment rose by 3.8 per cent to 98.5 in August 2014 from 94.9 in July. Confidence has recovered to a certain extent, given that it has improved by 5.9 per cent over the past three months and is 1.2 per cent below its pre-budget level. The lift in confidence was mainly due to improved optimism surrounding family finances and economic conditions for the near term. Expectations for house process gained, given that some of the market interest rates have been lowered.

The consumer sentiment index for Victorian consumers fell by 7.3 per cent to 90.7 in August 2014, following its post-budget recovery of 6.8 per cent in July. This was due to the decline in four of the five subcomponents, where the largest decreases were from ‘economic conditions in the next 12 months’ and ‘economic conditions in the next 5 years’, both recording a 10 per cent drop. The Victorian Time to buy a dwelling rose by 7.7 per cent in August, following a marginal increase of 0.2 per cent last month – although this is 9.1 per cent below its value, this time last year.

Source: Westpac - Melbourne Institute

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Labour Market (Victoria)

As of July 2014, Victoria’s unemployment rate in trend terms remained stable at 6.6 per cent from the previous month. On the other hand, the unemployment rate increased significantly in seasonally adjusted terms to 7.0 per cent over this period from 6.6 per cent in June. Notably, labour force participation rate rose in seasonally adjusted terms to 64.7 from 64.2, while remaining steady at 64.4 in trend terms.  At the national level, the unemployment rate remained stable at 6.0 per cent in trend terms and increased to 6.4 per cent from 6.0 per cent in seasonally adjusted terms. It should be noted that the large increase in unemployment this month could also be partly attributed to a sampling change by the ABS.

Source: ABS cat. 6202.0

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