Economics

The headlines said China’s economy slowed further in October with output, investment, and retail sales dipping (see separate story), but in the case of output, the week-long Golden Week and National day celebrations at the start of the month played a major role.

The final round of China’s economic data for October continued to paint a picture of a sluggish economy, but the week-long national holiday and 70th birthday celebrations at the start of the month were also a contributing factor to the weaker than forecast performance.

More signs in October that the great jobs boom is losing its bloom. In seasonally adjusted terms October saw the largest monthly fall job numbers in three years, sparking the usual speculation about another rate cut – in December.

For the second month in a row the National Australia Bank’s monthly business survey has hinted at a stabilising in the sluggishness afflicting large areas of the economy.

Australia’s trade surplus hit a record $21.1 billion in the three months to September, according to data released on Thursday by the Australian Bureau of Statistics.

Two surveys of economic activity in China’s huge manufacturing and services sectors showed a worrying cooling in October.

While the building approvals data for September showed a tiny bit of ‘light’ for worried policymakers with signs of a steadying of approval levels for apartments, units etc (albeit at low levels) and a small pick up in approvals for private homes, the credit data for the same month from the Reserve Bank was bad.

Australian dwelling approvals rose sharply in September in seasonally adjusted terms (which are still misleading) thanks to a big rise in approvals for apartments, units, and townhouses – the most volatile part of the statistics and one prone to rapid swings and revisions.

Absolutely nothing for interest rates and the Reserve Bank in yesterday’s September quarter consumer price index except to confirm that inflation is not a concern and if anything is a bit softer than the central bank reckons.

Ratings group Fitch has reaffirmed Australia’s AAA credit rating and believes that while growth is slowing, the Reserve Bank won’t have to resort to extraordinary monetary policy measures such as quantitative easing that has occurred in Japan, the UK, EU, and the US.

Attention refocuses on the health of the Australian economy this week with the release of the September quarter’s Consumer Price Index (CPI) on Wednesday and the start of month economic data, with building approvals, also for September out on Thursday.

Another OK jobs report for September from the Australian Bureau of Statistics on Thursday showed the labour market continues to withstand the stagnation spreading through cars, retailing, home building and construction.

South Korea’s central bank has again cut its key interest rate as the domestic economy and exports continue to sag.

China’s consumer price inflation got another pork push higher in September, while deflation tightened its grip on the country’s huge manufacturing sector.

Like RBA Governor Dr. Phil Lowe and his discovery of a “gentle turning point” in the past month, the NAB reckons there are hints the widespread sag in the economy has “slowed” thanks to an improvement in employment prospects.

Australia recorded another big trade surplus in September – not as large as August’s record, but big enough according to figures released by the Australian Bureau of Statistics (ABS) on Thursday.

Australian car sales continued to fall in September for the 18th month in a row. Figures from the Federal Chamber of Automotive Industries (FCAI) on Thursday showed total sales for September dropped 6.9% to 88,181 vehicles from a year earlier.

A per capita recession on its own is not the same as a real recession, and the three seen over the last 28 years do not compare to the recessions of the early 1980s and early 1990s in terms of their impact on jobs, economic welfare and confidence.

Nothing in the August jobs data that will cause a change of heart at the RBA except to confirm that the economy is running in very low gear with little chance of an improvement in weak wage growth in the next year and higher consumer spending.

Rather than a quarter of negative growth as some gloomy forecasters had been worried about New Zealand enjoyed better than forecast economic growth in the three months to June.

Another warning bell about the health of the major economies and global trade as Japan’s exports fell sharply in August for the 9th month in a row.

The latest Chinese economic data out for August shows the pace of economic activity clearly slowing from the already sluggish pace set in July.

Another lot of negative data about the health of consumer demand in China with car sales down for yet another month.

Chinese producer pricers remained in deflationary territory last month as soaring pork prices left consumer prices unchanged at a high 2.8% annual rate.

After the solid rise in housing finance for July and the second month of rising house prices in Sydney and Melbourne, some silly analysts and media writers are starting to talk about a rebound.

However, while the risks have gone up, recession remains unlikely: tax cuts should help growth in the current half year; the threat from falling property prices has receded; infrastructure spending is booming; the low $A is helping growth; the drag from falling mining investment is over; the current account is in surplus; there is scope for extra fiscal stimulus; population growth remains strong; and cyclical spending is low.