After the big data flow from the Reserve Bank in the past week — a post-board statement, new forecasts and the new statement on monetary policy, plus encouraging statistics on employment, building approvals and lending finance, not to mention a continuing rise in consumer and business confidence — there wasn’t much left for Reserve Bank Governor, Glenn Stevens to say at today’s appearance before the House of Reps Economics Committee.
His past appearances have seen a group of angry ants from the Federal Opposition buzz about spending, debt, not leaving enough ‘dry powder’ and general at-the-margin quibbling. Many are still angry that Mr Stevens upped rates just before the 2007 Federal Election.
But if anything, Mr Stevens has been a bit more optimistic at his appearances, especially in February, than the Opposition. Today Mr Stevens linked back to those comments, quietly making clear that Australia has so far dodged a bullet, points that he made in a speech in Sydney two weeks ago and in last week’s Statement on Monetary Policy.
Today he said in his opening address:
Mr Chairman, last time we met, I said that there were reasonable grounds to think that the Australian economy would come through this very difficult episode as well placed as any to benefit from renewed expansion.
That remains my view. The economy appears to be weathering a very large storm pretty well, and the community’s confidence about the future has improved commensurately.
It wasn’t crowing or boasting, just pointing out that he and the bank have been a bit more optimistic about where Australia sat as the credit crunch crunched and economies slumped at rates not seen since the 1930s.
Now there’s the cleaning up, and naturally the minds of market punters, pundits and others turned to interest rates. This paragraph got them slathering, again.
Nonetheless if things continue to look like they will turn out in that fashion, there will come a time when the exceptional monetary stimulus in place at present will no longer be needed. It will then be appropriate for the Board to do what it has done on past such occasions, namely to start adjusting interest rates back towards normal levels.
The timing and pace of those adjustments, if and when they come, will be a matter of careful consideration, taking into account all the relevant factors, including what might be happening with market interest rates.
In other words, just wait and see what happens; when they rise, we will tell you. But watch the data flow and ignore the fripperies.
His comments to the parliamentary committee came at the end of another week where investors put on the rose-tinted growth glasses and ignored the likes of Telstra and Coca Cola Amatil, two defensive shares which did well when things were rough, but which have been ignored in recent months.
That came be seen from the 0.9% in the Coca Cola Amatil share price this year, against the 19% rise in the ASX200.
China’s doing well, Europe has been doing better, with Germany and France escaping recession last night with 0.3% rises in GDP each, the US is levelling off.
But hold on, a rising stockmarket doesn’t mean a rising economy. The stats tell the real story:
3.7% was the rise in consumer sentiment in the Westpac/Melbourne Institute survey of consumer confidence, to its highest level in nearly two years, matching the continuing strong upturn in business confidence in Tuesday’s NAB monthly business survey.
6.8% was the rise in this week’s Roy Morgan survey of consumer confidence to the highest level since December 2007.
Wages growth slowed in the June quarter to 0.8%, unchanged from the March quarter, to give a yearly rise of 3.6%, down from the peak 4.3% in the December quarter. But the union-rich public sector saw a 1% rise in wages, for an quarterly growth rate of 4.5%. Hourly pay rates at manufacturers rose 2.7% in the June quarter from June 2008 to be the smallest rise, salaries at utility companies rose 4.6% was the largest gain.
398,000 was the size of the fall in tonnes in quarterly production of Portland cement (the stuff they use in building), a sharp fall of 15.5% from June last year, when 2.558 million tonnes of the stuff were churned out as the resources and infrastructure booms were peaking, to the June quarter of this year when 2.160 million tonnes were produced. That was the lowest quarterly figure for over five years and confirmed that there is a slump, despite what those folk in the stockmarket might be claiming.
1.625 million fewer tonnes of pre mixed concrete was produced in the June quarter than in the same quarter of 2008 when production peaked at a record 7.032 million tonnes. That’s where much of that Portland cement ends up. In the June quarter of this year, 5.4 million tonnes was produced, second only to the 5/146 million tonnes in the March quarter which was the lowest for well over five years. yes the boom has gone.
Petrojoules measure the output of gas and 235 of them were produced in the June quarter of 2009, which was 6 Pjs higher than in the June quarter of 2009. Gas is used in heating and in business, but is influenced by the coldness in winter. Production peaks in the September quarter because we have two months of winter to remind us that we need to keep warm.
2.444 million kilowatt hours extra electricity were produced in the June quarter, compared to the June quarter of 2008.. That’s high, but the three months to September of last year saw a record 63,297 million Kwhs produced, against the 58.104 million in the June quarter this year and 56.660 million in the second quarter of 2008. Hard to work out if that’s to do with a colder spring last year, warmer winter or just the dying embers of the economy boom.
Housing’s slide was best shown, not by the fall in concrete or cement, but in the record low 298 million clay bricks produced in the three months to June this year. That was 73 million less than in the second quarter of 2008, or a fall of 19.6%. Definitely no impact from the first home buyer builder’s grants, yet.
53,729 water heaters were produced in June of this year, up 3% on a year ago when 55,345 were produced, the highest number for over a year.
Eight million fewer litres of beer were turned out in the nation’s breweries in the June quarter: 398 million, against 390 million in the June quarter of last year. That was actually the highest June quarter’s beer production since 2005.
$40 million was the investment in the June half of this year by Coca Cola Amatil in new cold drink coolers for Australia, New Zealand, Indonesia and Quirks’ customers, no doubt to hold increasing numbers of bottles of CCA’s Glaceau vitamin water which it claims is now “the number one functional water brand” in Australia with a market share of over 30%6 and has now sold over 41 million bottles since its launch in February 2008.
Better break out the tap water!
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