The Australian Bureau of Agricultural and Resource Economics (ABARE) has blown the whistle on Australia’s pathetic export performance. With a once in a century commodity price boom, volumes for many mining exports are flat or indeed falling. David Uren and Kevin Andrusiak tell the sad story in today’s Oz. (The hard copy has two splendid graphs – worth cutting out and taping to your workshop wall.)
The Oz writers’ finger “crippling skills shortage and infrastructure bottlenecks” that are surely relevant. More general is the general lack of competitiveness of the Australian economy due to easy monetary policy, policy that is still roughly neutral despite a booming overall economy.
Now of course, just as huge investments by mining companies begin to bear fruit, commodity prices are off the boil. However, while these prices may be subdued compared to the recent experience of continual acceleration, the outlook for the global economy is still strong, despite concerns about the US economy (as its housing markets slide) and the more or less constant geopolitical worries. On this subject ABARE’s global economic overview is well worth a read. Readers may well wish to look at Henry’s commodity expert Nick Raffan’s latest article.
Also relevant is the rebound in consumer confidence, Australia’s two chief measures of consumer confidence, the Roy Morgan Consumer Confidence Rating and the Westpac/Melbourne Institute measure, rebounded strongly after suffering record falls during August.
The Roy Morgan Consumer Confidence Rating, released last Friday, rebounded 4.9 points in September to 108.6 after the measure plunged 14.4 points to 103.7 in August. The Westpac/Melbourne Institute measure of consumer confidence, released yesterday, showed a similar recovery, increasing rose by 12.5% in September to 101.2 points, after it fell by 16.2% in August.
The RBA is likely to be watching these measures like a hawk. Although not a foolproof gauge of consumer spending, consumer confidence gives the central bank an indication of how much aggregate demand is impacted by an interest rate rise. The major driver behind the rebound has been a substantial fall in the price of petrol, and with oil now at its lowest level since March, and consumers are seeing the benefits in their fuel bill, leaving them more money to spend elsewhere. It is this aspect that will concern the RBA, and if the price of oil maintains its current level, it is likely they will hike again.