Our spending on...
Clothes - least since January 2011
Cafes - least since October 2010
Books - least since September 2010
Furnishings - least since December 2009
Takeaways - least since August 2009
Shoes - least since December 2008
NSW, seasonally adjusted, ABS 8501.0
Sydney consumers are on strike, pushing spending at cafes to its lowest since October 2010, spending on takeaway food to its lowest since August 2009 and spending on shoes to its lowest since December 2008.
The Bureau of Statistics figures show NSW the only state whose spending was trending down in May and show no growth at all in spending in the year to May, at a time when nationwide spending grew 2.1 per cent.
Other figures released yesterday show NSW out of puff on newspaper job advertisements - which have been on a sliding trend for 12 months - and private home building approvals, which have been slipping for two months.
“The data can only be described as surprisingly weak,” said CommSec economist Savanth Sebastian. “Consumers are not spending and building approvals have slipped, sapping the economy’s momentum.”
“The risk of a near-term rate hike is off the agenda until things improve.”
The CommSec assessment came as ANZ dramatically downgraded its forecast of interest rate rises, saying there would now be none this year instead of the two it had previously forecast.
“The non-mining economy is exhibiting much less broad-based strength than in the first phase of the commodities boom,” research chief Ivan Colhoun said in a note to clients.
“Employment growth has slowed considerably in both the mining and non-mining states and is currently growing at a rate consistent with unemployment beginning to rise. Business conditions are lower across the economy and job advertising has broadly levelled off or begun a slight decline. Declining job ads are usually a forewarning of lower rates"...
National Retailers Association chief Margy Osmond blamed the collapse in retail spending on the fear of higher interest rates and concern about the impact of the proposed carbon tax.
“Australians need to know what this carbon price will mean for them as individuals, so they can see the real impact on their household budgets and plan accordingly,’’ she said.
The Reserve Bank last lifted interest rates in November 2010. An entire year without an interest rate move would be unusual. It hasn’t happened since 2004. But continual talk about higher rates and the big banks action in almost doubling the November rate hike have made consumers unusually wary.
The ANZ is still expecting rates to climb, but not until February 2012, or later if inflation remains contained.
The privately-compiled TD Securities inflation gauge released Monday showed zero inflation in the month of June and a rate of 2.9 per cent in the year to June, putting the annual rate within the Reserve Bank’s target band.
“If inflation remains restrained and the non-mining sector remains weak there is a chance of a modest cut in rates in the next 12 to 18 months,” said Mr Coulhoun. “The most recent board minutes hinted the Bank might be changing its view about the overall strength of the non-mining economy.”
Today’s Reserve Bank board meeting will be the last attended by retiring board member Warwick McKibbin who is believed to have been pushing for higher rates to contain inflation.
At a Melbourne Institute conference last week he signaled a change in his view warning the global economy was facing a "slow motion train wreck" with Greece only the first nation to be hit. The fallout from a repudiation of debts in Europe would make the most recent global financial crisis seem like a “blip”.
Published in today's SMH and Age
ANZ Australian Economic Update - Monetary Policy - A Longer, Slower Tightening Cycle
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ANZ Job Ads, 8731.0 8501.0
