Report Published: May 2016
Recovery will take its own sweet time. The lower dollar will help structural change to build the momentum of growth. But this will be a long, hard haul.
The government doesn’t have a magic wand. The best they can do is smooth the path by preventing infrastructure bottlenecks. And they mustn’t frighten the horses.
Lower interest rates won’t stimulate investment. Business has to be ready to invest. After a long phase of cost-cutting and deferring investment, that will require improved demand and profits, with absorption of excess capacity making investment sensible. That’s still two years off. Meanwhile, growth is being sustained by solid consumer expenditure as households slowly loosen the purse strings on savings.
First, we have to absorb the shock of falling mining investment. And the end of the housing boom. And then we have to wait for the slow improvement in dollar-exposed industries to broaden through the rest of the non-mining economy.
The recent rise in the Australian dollar to US 78 cents was a concern. A higher dollar would slow the resurgence of Australian dollar-exposed industries after a decade of constraint. And that’s an integral part of structural change and economic recovery. The dollar is now back around US 72 cents and, on our interpretation, it’s the lower interest rate that turned it around. Certainly, the RBA would like to see a lower dollar. And they could again use interest rates to facilitate that, though they can’t say so. Based on our behavioural model, at current interest rate differentials and commodity prices the dollar is now about right. And it’s much easier for the RBA to try to nudge the dollar back to sensible market levels than try to achieve a non-market target. We’d prefer the dollar to be a lot lower, but that’s not likely to happen. And we are now at a level which puts the dollar-exposed industries and non-mining recovery back on its (slow) track.
With growth expected to remain relatively weak, we expect employment growth to slow. This is not a steady-state recovery after a downturn – it will involve major structural change driven by the lower dollar, with cyclical shifts affecting outcomes for different industries and regions.
In this month’s Bulletin:
- State of play
- Interest rate and exchange rate outlook
- Inflation outlook
- Budget wrap
- Analysis of the March 2016 quarter national accounts and revised forecasts
- An update on the international economy
- Construction and investment outlook
- Commodity price forecasts
- How the fall in the dollar is impacting on imports?
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Adobe PDF document files for download by subscribers.
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)
EO BULLETIN AUGUST 2015 (pdf, 955 KB)
EO BULLETIN JUNE-JULY 2015 (pdf, 788 KB)
Microsoft Excel spreadsheets and PDF files for download by online subscribers.
EXCHANGE RATES – WEEKLY (xls, 2.24 MB)
INTEREST RATES – WEEKLY (xls, 2.24 MB)
STOCK PRICES – WEEKLY (xls, 5.72 MB)
COMMODITY PRICES – WEEKLY (xls, 1.69 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 27.05.2016 (xls, 1.04 MB)
COSTS & PRICES UPDATED 27.05.2016 (xls, 611 KB)
EXTERNAL SECTOR UPDATED 27.05.2016 (xls, 1.12 MB)
FINANCIAL INDICATORS UPDATED 27.05.2016 (xls, 1.82 MB)
BUSINESS INDICATORS UPDATED 27.05.2016 (xls, 874 KB)
ECONOMIC INDICATORS UPDATED 27.05.2016 (xls, 1.59 MB)
PDF document files for download by online subscribers.
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)
AUG 2015 – CURRENT STRENGTH IN EMPLOYMENT UNLIKELY TO BE SUSTAINABLE (pdf, 322 KB)
JUNE/JULY 2015 – TOURISM – THE NEXT BOOM INDUSTRY (pdf, 229 KB)
Microsoft Powerpoint, Excel and Adobe PDF document files for download by online subscribers.
EO BULLETIN MARCH 2016 (pdf, 727 KB)
EO CHARTBOOK MARCH 2016 (pdf, 1.70 MB)
EO CONFERENCE SLIDES MARCH 2016 - PART 1 (ppt, 1.03 MB)
EO CONFERENCE SLIDES MARCH 2016 - PART 2 (ppt, 1.33 MB)
EO CONFERENCE SLIDES MARCH 2016 - ENGINEERING CONSTRUCTION OUTLOOK (ppt, 1.74 MB)