Death of inflation buries wages increases
Australia’s inflation rate dropped to an underlying 1.2% year-ended September, effectively killing off inflation, and with it, any prospect of wages growth in the near term. Of course, the recession has played a large part in seeing real prices grow in only the most meagre of ways, but of course, the trend was headed own anyway.
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Housing approvals: don’t you weirdos know we are in a recession?
Housing approvals continue to be remarkably stable, given all of the conditions influencing the Australian economy. At an annualised 172,204 dwellings, approvals for the year-ended August 2020 were just 3.2% lower than a year earlier, underpinned by a resilient free-standing housing sector that seems almost incapable of reacting to bad news right now.
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Population: why zero net migration will be a shock to the housing system
For all that dwelling approvals are pumping along in Australia right now, there are factors weighing against the sector in 2021 and a few years beyond. One of the most significant is the likelihood Australia will slump to zero net overseas migration in 2021 and beyond.
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Housing finance lifts, but rules suggest a fall is around the corner
Australians are hammering the housing credit card right now, borrowing at very high levels, supported by the Government’s stimulus measures. However, it isn’t all rosy news, with banks increasing their provisions for bad loans, and the first increase in defaults expected to be just around the corner.
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Log export spike comes with barbs
Australia’s softwood log exports exploded to a monthly record in August 2020. Exports totalled 513,755 m3, up a stonkering 59% on the prior month and exceeding the prior record (May 2017) by 10%. Driven by strong demand in the main Chinese market, exports are about as patchy as they could be right now, with global market asymmetry an abiding feature.
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Building activity stable through June quarter
Defying the orthodox expectations of a collapse, June quarter building activity was broadly stable, with the value of new house commencements and completions softening by 0.8% and 0.5% respectively. The pipeline of work (recorded by value) rose sharply in the June quarter, adding to the good news for the second half of 2020, but with lingering doubts the result for the quarter may be a stimulus fuelled ‘bubble’.
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Local sawn softwood sales hit new record
Monthly sales of locally produced sawn softwood products were above 300,000 m3 for just the third month ever and the second time in three months. At 305,706 m3, sales indicate a local production volume that is more or less at capacity. As ever, import supplemented local supply, with sawn softwood imports reaching 46,857 m3 in August.
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Local sales outperformed September quarter forecasts
Latest forecasts from ABARES point to a strong December quarter, after the undeniable – and surprising – local softwood sales lift in the September 2020 quarter. In fact, the September lift was so significant, the ABARES’ forecasts from July were outperformed by as much as 19.5%!
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6.9% unemployment? The weirdest number of all
Australia’s unemployment rate was 6.9% in September, up 0.1% on the prior month, but lower than the pandemic peak of just 7.5% in July. This is a weird result, masking an under-story that is likely to ripple through the Australian economy for many years to come. Most of the job recovery was part time work, and many of the currently employed are receiving JobKeeper support that ends in March 2021.
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