The resources boom goes on, and is widely expected to go on even further.
The talkfest held under the “Davos Connection” banner is to be held in Melbourne today. Visiting Asia guru, Dr Ken Courtis, said “Australia’s eyes should be firmly on Asia for the coming decades.
“Imagine we were in London, Paris or Rome in 1907,” he said. “Looking out, we’d see the United States just starting its rise, which would go on to become the dominant economic and cultural determinant of the century. Now, in 2007, we face the same scenario, on the same dimension, with the Asian renaissance.”
“Dr Courtis pointed to continued strong demand from China, India, a resurgence from a strengthening Japan and emerging economies such as Vietnam, which will have a population bigger than Japan’s by 2020.
“Australia is in a perfect position, spoked into the dominant sources of global growth for this century,” he said.
In economic data to be released this week, the ABS Labour Price Index to be released on Wednesday is the most important, as well as the two measures of consumer confidence. With interviewing conducted on the weekend leading up to last Tuesday’s budget, and after the ALP conference (where business groups rejected Labor’s IR plan), the latest Roy Morgan Consumer Confidence rating shows that confidence declined marginally from 124.3 in April to 122.5 in May.
With interest rates likely to remain on hold at least in the short-term, Henry expects consumer confidence to remain at historically elevated levels, especially given the tax cuts in the budget.
All eyes will be on the Labour Price Index, with the current expectation being for a 1.3% increase for the March Quarter (4.4% for the year). Of course, the last measure (for the December Quarter) was widely tipped to be artificially low, because it failed to include the Fair Pay Commission’s hike in the benchmark weekly wage for Australia’s lowest-paid workers.
Also of concern in these figures is industry-specific wage growth. Last quarter, increases in the original indexes through the year ranged from 2.0% for accommodation, cafes and restaurants (lower than inflation – ie. real wage decrease) to 6.5% for Mining, compared with 4.0% for all industries. With the Fair Pay Commission decision for a 5.6% boost to low wage occupations to be included in this quarter, as well as increasing tightness in the mining labour market, this figure could well surprise on the upside.
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