27 March - Chamber of Commerce and Industry

Trendline
Your weekly update of the latest economic trends
27 March 2015
Western Australia’s population growth slows,
but still fastest in the nation
Australian demographic statistics were released by the ABS
on Thursday, and showed that Western Australia’s population
growth rate has continued to slow but remains the highest of all
Australian states and territories.
In the September quarter of 2014, WA’s population grew at
an annual rate of 2.1 per cent. Whilst this is the lowest growth
rate in nine years and significantly lower than the 3.7 per cent
experienced three years ago, population growth in WA did not
continue the sharp downward trend reported in recent releases
and may have stabilised at around the two per cent mark.
The largest contributor to this stabilisation was a strong,
unexpected increase in net overseas migration, which totalled
10,911 in the September quarter. This represents the first
quarter-on-quarter increase in net overseas migrations since
September 2013, and was almost four times the number
recorded in June.
Meanwhile, net interstate migration was negative on the quarter,
with a net 176 people moving out of the state in September. This
marked the first time WA had recorded two consecutive quarters
of negative interstate migration since 2003. The natural increase
in WA’s population remained steady at around 5,000 on the
quarter. With these results, the total population in WA now stands
at approximately 2.59 million.
In other Australian states and territories the most notable result
was in Queensland, which reported its lowest population growth
rate in 15 years at just 1.5 per cent. The slowdown was largely
the result of only 1,544 people moving to Queensland from
interstate over the quarter, which is well down on the Queensland
average over the past decade of 3,756 people per quarter.
Australia as a whole reported annual population growth of
1.5 per cent in the September quarter, with its total population
now reaching approximately 23.6 million.
Chinese growth fears and iron ore price woes
The iron ore market has been in the news again this week, with
a number of events and data releases stoking concerns that the
market may not have yet found a bottom.
Fears around a Chinese slow down have been reinforced with
the preliminary HSBC China Manufacturing Purchasing Managers
Index (or flash PMI), an indicator of factory activity, hitting an
11 month low. The PMI fell to 49.2 in March compared with
50.7 in February. This is the second time this year the index has
fallen below 50, with a reading below 50 deemed a contraction.
The price of the steel making commodity has itself
continued to fall, with the benchmark spot price falling under
US$55 per tonne this week. There is no positive outlook in the
short term, with sea borne supply continuing to ramp up from
major producers, and demand from China waning. An index of
iron ore exports from Port Hedland charted against iron ore
inventory held at Chinese ports is illustrative of the mismatch in
supply and demand in the current market, with large growth in
exports and historically high inventory levels at ports.
The outpacing of exports to inventory at ports started
around the end of 2012, where the price dropped to around
US$87 per tonne. This trend has persisted leading to the price
levels seen today. Analysts, such as Morgan Stanley, have
further downgraded their forecasts of the commodity.
Morgan Stanley has reduced their iron ore price forecast
for 2015 by 28 per cent, to just US$57 per tonne.
Meanwhile, Citibank now expects prices to drop below the
US$50 per tonne level. This time last year both firms were
predicting triple digit prices.
Towards the end of the week, founder of Fortescue Metals Group,
Andrew Forrest, has suggested a has suggested a cap on iron ore
production in Western Australia in a bid to reverse the dramatic
slide in the price of the commodity – in a sign of just how far the
market has evolved in the past 12 months.
Iron Ore Supply Index
Port
Hedland Export Vs Chinese Ports Stockpiles, Base = 2010
Iron Ore Supply Index
Port Hedland Export Vs Chinese Ports Stockpiles, Base = 2010
260
260
Port Hedland Exports
220
220
Chinese Ports Stockpiles
180
180
140
140
100
100
60
Feb-2011
Source: Bloomberg
Feb-2012
Feb-2013
Feb-2014
60
Feb-2015
Data wrap-up
25/03/15
WA & Australia, 000s
Department of Employment Job Vacancies
WA & Australia, 000s
35k
US New home sales data was released by the US Census Bureau on
Wednesday, and showed that the number of new homes sold in in February
increased by 7.8 per cent from the previous month to reach a seasonally
adjusted annual rate of 539,000 sales. With the strong increase, the
annualised rate now sits at its highest levels since February 2008 – before
the collapse of Lehman Brothers precipitated the Global Financial Crisis.
February’s figures were largely unexpected as economists previously
predicting an annual rate of 464,000 sales. The strong result indicates
that positive job figures are starting to have an effect on the US housing
market, with US consumers taking advantage of the record low mortgage
rates on offer.
Australia (RHS)
300k
25k
250k
20k
200k
15k
150k
10k
Feb 10
Feb 11
Feb 12
Feb 13
100k
Feb 15
Feb 14
Source: DEEWR
The February Consumer Price Index for the United Kingdom was unchanged
on the year. A year-on-year change of 0.0 per cent is the lowest rate recorded
in the UK since records began in 1989. The previous low was seen in January
with year-on-year growth of 0.3 per cent. The UK Office for National Statistics
reported the largest detractor from the Index for February was a decline in the
price of recreational goods, food and furniture and furnishings. Furthermore,
there were no large increases in prices to offset the declines. Despite
February’s decline, core CPI (CPI minus food and energy prices) increased
1.2 per cent year-on-year. However, this was below the consensus of
1.3 per cent year-on-year growth. There are growing deflationary concerns
in the UK, analysts have estimated CPI will dip below zero in the coming
months and hover around zero for the remainder of 2015.
United Kingdom Consumer
Price Index
Annual Percentage Change, Base = 2005
United Kingdom Consumer Price Index
Annual Percentage Change, Base = 2005
6
6
Core CPI (YoY)
CPI (YoY)
4
4
2
2
0
Feb 05
Feb 07
Feb 09
Feb 11
0
Feb 15
Feb 13
Source: Bloomberg
United States Consumer Price Index
Annual Percentage Change, Base = 1982-84
United States Consumer Price Index
Annual Percentage Change, Base = 1982-84
6%
Core CPI (YoY)
5%
6%
CPI (YoY)
5%
4%
4%
3%
3%
2%
2%
1%
1%
0%
%
-1%
Hundreds
The United States Bureau of Labour Statistics has reported consumer prices
in the US were also unchanged on the year. In February, CPI was unchanged
year-on-year at 0.0 per cent, which was above the consensus of a
0.1 per cent decline in prices. Energy prices were the largest detractor on the
Index, declining 18.8 per cent year-on-year. However, core CPI increased
1.7 per cent year-on-year and was above the markets estimate of 1.6 per cent.
Low growth levels in consumer prices would be of concern for the Federal
Reserve as they near their first interest rate hike since the GFC in 2008.
However, the extent to which headline inflation is being affected by recent
declines in global oil prices may become clearer in the coming months.
350k
WA (LHS)
30k
-1%
-2%
-2%
-3%
Feb 05
Feb 07
Feb 09
Feb 11
Feb 13
-3%
Feb 15
Source: Bloomberg
US New Home Sales
Annualised
US
New Home SalesSales
of New Dwellings, Thousands
Annualised Sales of New Dwellings, Thousands
650k
650k
600k
600k
550k
550k
500k
500k
450k
450k
400k
400k
350k
350k
300k
300k
250k
200k
Feb 08
250k
Feb 09
Feb 10
Feb 11
Feb 12
Feb 13
Feb 14
200k
Feb 15
Source: Bloomberg
The week ahead
30/03/15
The start of the week sees Japan release industrial production figures and a number of European countries release consumer
confidence results.
31/03/15
The first domestic release of the week comes on Tuesday with the ABS’ regional population growth report. The HIA new home
sales data for February will also be released. Globally, euro area CPI, unemployment and United States consumer confidence
figures will be released.
01/04/15
The first day of April will see the ABS release building permit statistics, which have in recent times suggested Australia’s
home building boom may be approaching its peak.
02/04/15
Domestically, export and import figures are slated for release on Thursday, and are the major release of the week.
03/04/15
In Australia, Friday is a public holiday for Good Friday. US economic data doesn’t take time off, though, with the
US non-farm payrolls and related labour market statistics to be released in the evening.
Produced by CCI Economics The Chamber of Commerce and Industry of Western Australia (Inc)
180 Hay Street, East Perth WA 6004 Telephone (08) 9365 7555 Facsimile (08) 9365 7550 Email: economics@cciwa.com
Thousands
24/03/15
Department of Employment
Job Vacancies
Hundreds
24/03/15
Monthly job vacancy figures were released by the Department of
Employment on Tuesday and showed that WA vacancies decreased by
4.5 per cent in February to reach 16,419. This was the weakest result in
the nation, with declines also reported in Queensland (3.9 per cent) and
increases reported in Tasmania (five per cent), the Northern Territory
(4.2 per cent) and Victoria (0.7 per cent). Vacancies in Australia as a whole
decreased 1.1 per cent in February and now stand at 157,238. In terms of
year-on-year growth, job vacancies in WA have fallen by 3.7 per cent, which
is significantly lower than the 6.9 per cent increase recorded nationally.
The main attributers to the WA yearly decline were decreased vacancies
reported for machinery operators and drivers (15.6 per cent), technicians
and trade workers (8.3 per cent) and managers (5.2 per cent), whilst
community and personal service workers (18.1 per cent) and labourers
(11.3 per cent) reported the largest increases in WA job vacancies.
Thousands
24/03/15