7 Feb 2014
• The Reserve Bank of Australia elected to keep rates on hold citing improving conditions and a lower Aussie dollar. Rising unemployment is now their main concern, with rates now steading for an extended period of time.
• Australian retail sales (values) rose solidly in December continuing a stronger trend more recently. 4th quarter retail volumes were also up.
• Manufacturing activity remained in contraction for the 3rd consecutive month in January – a lower Aussie dollar is required in addition to labour market reforms.
• The value of loans outstanding to the private sector in December posted its biggest monthly rise since March 2012.
• Building approvals fell more than expected in December, though approvals are 22% higher than in December 2012. Alterations & additions remain low (lowest level since mid-09), but non-residential building approvals rebounded strongly.
• Home prices have continued their climb in January with capital city home values rising 1.2% for the month. Prices in Melbourne were up the strongest in January.
• Details of the 1st estimate of US 4th quarter economic growth were stronger than expected. US household consumption rose at its fastest pace since 2010 whilst US business investment recorded its 3rd consecutive quarter of strong growth.
• Eurozone manufacturing data was positive indicating a recovery of some sort in Eurozone industrial production.
• Markets globally fell early in the week as Chinese manufacturing data was weaker than expected.
• The data didn’t assist emerging country stock markets (especially those countries that are commodity exporters) which continued their fall from the last week.
• Markets then finished around flat for the week with the exception of Europe, which was up on positive economic data.
• In local stock news, Origin Energy reported a lift in production and revenue in the December quarter due to higher volumes and increased commodity prices.
• JB Hi Fi provided an upbeat first half earnings announcement. Net profit was up 10% on the same period last year whilst the retailer also lifted its gross margins.
• It has been reported that Woodside Petroleum is nearing a final deal to enter the hotly contested Leviathan gas project in Israel. Woodside will purchase 30% for $3bn with the project operational in 2017.
• Woolworths reported an increase in first half sales assisted by a successful Christmas trading period and solid results in food & liquor. Their Masters hardware business continues to disappoint.
• The Aussie dollar rose following the RBA’s decision to maintain the cash rate setting and following better than expected trade data. The dollar rose strongly from lows near 87c to 89c against the US dollar.
• Treasurer Joe Hockey has signalled an early release of the Commission of Audit’s findings and argued the public needs to understand the magnitude of the task facing the government if it is going to support the necessary budget cuts.
• Treasurer Hockey also said that the structural position of Australia’s budget is now unsustainable, meaning the government is unable to finance projected growth in government spending from our existing tax base. The short of it….public debt will continue to grow without significant budget cuts.
• A report on reforms undertaken by the federal and state governments to improve competition and regulation has found governments have completed 31 of the 45 reforms covered by the national partnership agreement. Critically, those not completed are in the very important areas of occupational health & safety, energy pricing, and transport and infrastructure….good work so far, but need to get cracking on the others!