Report Published: August 2016
The Hard Yards: storms, headwinds, slow growth & structural change
Growth to remain soft as structural change required before growth picks up.
Meanwhile, a few negative shocks to absorb including:
- We are still only half way through the fall in mining investment
- Residential building is peaking and about to turn down
- The dollar is still too high for competitive domestic industry, though much better than before
The negative shocks and headwinds are offset by:
- $A low enough for initial recovery in dollar-exposed export and import-competing industries
- Strong growth in resources exports and production as capacity comes on stream. Will slow
- Start of 4-year recovery in infrastructure spending, not enough by itself to offset negatives
The next stage for Australia will depend on the ability to rebuild non-mining industries. $A the key.
The loss of the motor vehicle industry is a salutary lesson on the importance of the dollar as the primary driver of competitiveness. Dollar-exposed industries were weak or in recession through the period of the high (overvalued) dollar.
The exit of car manufacturing industry adds another shock to growth. Decisions were made when the $A was above parity. Whitegoods manufacturers too have exited. We wonder whether decisions would have been different at current $A.
The lower dollar has helped competitiveness.
- Some announced closures of secondary processing of food facilities didn’t eventuate.
- Encouragingly, the lower dollar and cost cuts have underwritten a profit for Port Kembla steel.
- And there are other stories of smaller manufacturers’ clients returning from overseas sourcing.
While a lower dollar is promising, it is still not low enough for some operations.
Once the negative shocks have been absorbed, strengthening net exports of services will broaden through the non-mining economy, underwriting growth, profitability and, eventually, investment.
To rebuild Australian non-mining industries and realise growth potential will take the rest of this decade.
Meanwhile, world growth is slowly recovering. The US economy is the key and its recovery is on track. It was always going to take a decade. The Euro zone is weak, just coming out of cost imbalances which caused their rolling recessions while the UK is fixated on Brexit. Uncertainty will be a setback to the UK economy in the short-term, but they’ll be okay. We think the concerns about a slowing Chinese economy and the impact on non-mining Australia are overstated.
In this month’s Bulletin:
- State of play
- With price and wage inflation low, will the RBA cut rates again?
- An update on the international economy
- Impacts of the car manufacturing shutdown
- Analysis of the June 2016 quarter national accounts and revised forecasts
- Construction and investment outlook
- Growing part-time employment and how it is impacting on measures of productivity
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Adobe PDF document files for download by subscribers.
EO BULLETIN AUGUST 2016 (pdf, 1.53 MB)
EO BULLETIN JUNE-JULY 2016 (pdf, 1.11 MB)
EO BULLETIN MAY 2016 (pdf, 834 KB)
EO BULLETIN APRIL 2016 (pdf, 776 KB)
EO BULLETIN MARCH 2016 (pdf, 727 KB)
EO CHARTBOOK MARCH 2016 (pdf, 1.70 MB)
EO BULLETIN FEBRUARY 2016 (pdf, 1.16 MB)
EO BULLETIN DECEMBER 2015/JANUARY 2016 (pdf, 756 KB)
EO BULLETIN NOVEMBER 2015 (pdf, 628 KB)
EO BULLETIN OCTOBER 2015 (pdf, 1.57 MB)
EO BULLETIN SEPT 2015 (pdf, 765 KB)
EO CHARTBOOK SEPT 2015 (pdf, 2.64 MB)
Microsoft Excel spreadsheets and PDF files for download by online subscribers.
EXCHANGE RATES – WEEKLY (xls, 2.26 MB)
INTEREST RATES – WEEKLY (xls, 2.24 MB)
STOCK PRICES – WEEKLY (xls, 5.72 MB)
COMMODITY PRICES – WEEKLY (xls, 1.71 MB)
CALENDAR OF RELEASES AND EVENTS (pdf, 19 KB)
LATEST DATA AND FORECASTS
Microsoft Excel spreadsheets and PDF documents for download by online subscribers.
STATE INDICATORS UPDATED 25.08.2016 (xls, 1.04 MB)
COSTS & PRICES UPDATED 25.08.2016 (xls, 609 KB)
EXTERNAL SECTOR UPDATED 25.08.2016 (xls, 1.13 MB)
FINANCIAL INDICATORS UPDATED 25.08.2016 (xls, 1.83 MB)
BUSINESS INDICATORS UPDATED 25.08.2016 (xls, 872 KB)
ECONOMIC INDICATORS UPDATED 25.08.2016 (xls, 1.59 MB)
PDF document files for download by online subscribers.
AUG 2016 – STATE OF PLAY (pdf, 450 KB)
AUG 2016 – WITH PRICE AND WAGE INFLATION LOW, WILL THE RBA CUT RATES AGAIN? (pdf, 436 KB)
AUG 2016 – AN UPDATE ON THE INTERNATIONAL ECONOMY (pdf, 813 KB)
AUG 2016 – IMPACTS OF THE CAR MANUFACTURING SHUTDOWN (pdf, 572 KB)
JUNE/JULY 2016 – GDP GROWTH OF 3 PER CENT UNSUSTAINABLE BEYOND THE NEAR TERM (pdf, 107 KB)
JUNE/JULY 2016 – CONSTRUCTION AND INVESTMENT OUTLOOK (pdf, 284 KB)
JUNE/JULY 2016 – NON MINING BUSINESS INVESTMENT ON A SLOW ROAD TO RECOVERY (pdf, 118 KB)
JUNE/JULY 2016 – FALLOUT FROM THE UK’S DECISION TO LEAVE THE EUROPEAN UNION (pdf, 336 KB)
MAY 2016 – STATE OF PLAY (pdf, 51 KB)
MAY 2016 – INTEREST RATE AND EXCHANGE RATE OUTLOOK (pdf, 134 KB)
MAY 2016_INFLATION OUTLOOK (pdf, 112 KB)
MAY 2016_BUDGET WRAP (pdf, 215 KB)
APRIL 2016 – STATE OF PLAY (pdf, 51 KB)
APRIL 2016 – TOURISM CONTRIBUTION TO GDP AND EMPLOYMENT (pdf, 142 KB)
APRIL 2016 – OUTLOOK FOR STATES (pdf, 246 KB)
MARCH 2016 – ECONOMIC OVERVIEW (pdf, 128 KB)
MARCH 2016 – STATE OF PLAY (pdf, 70 KB)
MARCH 2016 – CONSTRUCTION AND INVESTMENT OUTLOOK (pdf, 67 KB)
MARCH 2016 – OUTLOOK FOR INDUSTRY OUTPUT, PROFITS AND EMPLOYMENT (pdf, 79 KB)
FEB 2016 – WHY AUSTRALIA WON’T SLIP INTO A RECESSION? (pdf, 40 KB)
FEB 2016 – INTERNATIONAL ECONOMY – CURRENT STATE OF PLAY AND OUTLOOK (pdf, 69 KB)
FEB 2016 – COMMODITY PRICES SLUMP AMID THE TURMOIL – BUT SLOW AND MIXED RECOVERY EXPECTED (pdf, 71 KB)
FEB 2016 – HOUSEHOLD SPENDING UNDERPINNING GROWTH – RETAIL SALES, MOTOR VEHICLES AND EMPLOYMENT (pdf, 171 KB)
FEB 2016 – PROSPECTS FOR INFLATION (pdf, 43 KB)
DEC 2015/ JAN 2016 - UNBALANCED GROWTH AWAITS NON-MINING INVESTMENT RECOVERY (pdf, 91 KB)
DEC 2015/ JAN 2016 - ANALYSIS OF NATIONAL INCOME, PROFITS AND OUTPUT BY INDUSTRY SECTOR (pdf, 93 KB)
DEC 2015/ JAN 2016 - CONSTRUCTION AND INVESTMENT OUTLOOK (pdf, 89 KB)
DEC 2015/ JAN 2016 - RESIDENTIAL BUILDING CYCLE NEARING ITS PEAK? (pdf, 115 KB)
DEC 2015/ JAN 2016 - RECENT TRENDS IN PUBLIC SECTOR INVESTMENT BY ASSET TYPE (pdf, 37 KB)
NOV 2015 – IS THE ECONOMY GETTING ANY BETTER? (pdf, 55 KB)
NOV 2015 – HOW SUSTAINABLE IS EMPLOYMENT GROWTH? (pdf, 64 KB)
NOV 2015 – ENGINEERING CONSTRUCTION OUTLOOK (pdf, 121 KB)
OCT 2015 – NON-MINING BUSINESSES AREN’T READY TO INVEST YET (pdf, 55 KB)
OCT 2015 – OUTLOOK FOR STATES (pdf, 157 KB)
SEPT 2015 – MINING PROFITS COLLAPSING BUT NON-MINING PROFIT GROWTH PROMISING (pdf, 87 KB)
SEPT 2015 – INVESTMENT ACTIVITY TO CONTINUE FALLING OVER NEXT FEW YEARS (pdf, 156 KB)
Material from the September 2016 Conference will be available for download by online subscribers on 16th September.