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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 Reserve Bank meeting in September 2014, rates remained on hold at 2.50 per cent. Consensus forecasts indicate that rates will be stable through 2014, given the continued deterioration of labour market data and impending inflation. Despite the elevation in overall price growth, the Australian dollar remains strong given the decline in key commodity prices. As such, inflation is expected to remain within its target level of 2-3 per cent. The economy is continuing to grow at a moderate pace with consumer sentiment recovering from post budget levels and a reasonable improvement in business conditions. However, the RBA continues to expect the economy to grow a little below trend over the rest of the year and with rates to remain stable over the foreseeable future.

Source: Reserve Bank of Australia

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GDP

Over June quarter 2014, GDP grew in Australia by 0.7 per cent in trend terms compared to 0.8 per cent in the previous quarter. This translated to a growth of 3.2 per cent over the year compared to 3.1 per cent in the previous quarter. In seasonally adjusted terms, the economy grew by 0.5 per cent over the quarter compared to 1.1 per cent growth in the preceding quarter, with a growth of 3.1 per cent over the year. Mining (up 1.2 per cent), financial and insurance services (an increase of 0.6 per cent) and construction (a 0.5 per cent rise) were the largest contributors to trend growth. State Final Demand in Victoria grew by 0.8 per cent in the June quarter in trend terms (0.7 per cent previously), while growing 1.2 per cent over the same quarter in seasonally adjusted terms following an increase of 0.7 per cent in the March quarter.

 

 

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 fell by 4.6 per cent to 94.0 in September 2014 from 98.5 in August. Consumer confidence which was on a path of recovery has now softened, given rising concerns on the labour market and economy (especially the five year outlook). However, sentiment is still 1.1 per cent below its post budget level. House price expectations have continued to rise, despite decreased sentiment surrounding the time to buy a dwelling.

The consumer sentiment index for Victorian consumers rose by 9.5 per cent to 99.3 in September 2014, following a sharp decline of 7.3 per cent in the previous month. The index is now at its highest level in seven months, given that four of the five index subcomponents increased over the month. The most significant changes were from the index subcomponents reflecting economic conditions for the next 5 years and the next 12 months, both having an increase of 20 per cent over the month. The Victorian Time to buy a dwelling rose by 8.0 per cent in September following a increase of 7.7 per cent last month – although this is significantly below its value, this time last year.

Source: Westpac - Melbourne Institute

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Labour Market (Victoria)

The unemployment rate in Victoria for the month of August was at 6.8 per cent in both trend terms (up from 6.7 per cent last month) and seasonally adjusted terms (down from 7.0 per cent over the same period). The labour force participation rate rose by 0.6pts to 65.2 from 64.8 in seasonally adjusted terms while increasing slightly to 64.8 from 64.7 in trend terms. The national rate of unemployment increased to 6.2 per cent from 6.1 per cent in trend terms over the month of August. However, seasonally adjusted estimates decreased to 6.1 per cent from 6.4 per cent during the same period. The decline in seasonally adjusted terms was mainly due to a sharp increase in part time employment (up 2.9 per cent).

Source: ABS cat. no. 6202.0

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