Employment still strong: the April employment figures from the Bureau of Statistics show a solid 33,700 rise in new jobs in the quarter, all of them full time, a small fall in part time employment and a steady unemployment rate of 5.4%. It was the 8th month in a row that we’ve seen a rise in the number of people employed and 11,025 million people are now employed — an all time high. The 33,100 new jobs are well above market estimates for around 20,000 new jobs.
Unemployment rate steady: the unemployment rate was a steady 5.4% from the same rate in March (originally 5.3%). The ABS said unemployment rose by 6,500 people in the month to 628,100 as more people looked for work. Despite the rise in jobs, the ABS said the seasonally adjusted monthly aggregate hours worked series showed a fall in April, down 8.3 million hours to 1,531.4 million hours. The number of hours worked also fell in March when just over 19,000 new jobs were created. There seems to be something wrong here with this measure, the two don’t add up.
LNG delay: as Crikey forecast in late March and denied at the time, Japanese group Inpex Corp has delayed its Northern Territory LNG project, called Ichthys, and won’t make the previously stated 2015 operational start. After we wrote this on March 29, NT officials said they had been told nothing had changed. It had and we were told that Inpex would officially confirm it in May. Which it did overnight. It’s the second delay for the project in the past year. Inpex is partner with French oil giant Total. The announcement in Tokyo didn’t provide an explanation, but the company is said to be struggling with the size and scope of the project and its multibillion dollar cost. The first delay was in November last year. No new deadline was given for the project, which will have an annual production of eight million tonnes of LNG, if it is ever built.
Eurowatch: first the bad news. The Greek economy shrunk by 0.8% in the March quarter, the same as in the December quarter. There will be many more quarterly reports such as that in coming year. The rest of Europe grew in the March quarter (massed choirs sing, “We’re saved”), by just 0.2% as the cold winter (that’s right, blame the snow again) cut growth. That was after flat growth in the December quarter, so it’s good news, of sorts, Italy the unlikely stand-out with a rise of 0.5% (drop it from the PIIGS). France had growth of just 0.1%, as did Spain, which is now out of recession. The US economy grew 0.8% according to the first estimate, China well over 11%.
Spain cuts: Spain took a bigger axe to spending overnight, cutting public service wages by 5% this year and freezing them in 2011; dropping a €2500 baby bonus, cutting spending in regions by €1.2 billion, trimming €6 billion from public investment; cutting €600 million from foreign aid and other reductions. Total savings of €15 billion, which will reduce the deficit to just over 6% by the end of next year from 11.2% last year. Naturally the unions and others are unhappy, but it is what has to happen seeing the rest of Europe is underwriting Spanish debt for the foreseeable future. These cuts won’t be the last from Europe. Austerity is a tough gig.
Hey, America’s got lots of debt: figures out overnight show that the US government recorded its largest ever deficit for April last month. April in the US is when tax is paid and it’s normally a month when the government is flush with cash. And yet the deficit was $US82.7 billion, compared with a smaller bit of red ink last year of $US20.9 billion. It was much bigger than market forecasts and was the 19th successive monthly deficit. It’s not Greece or Japan, but it’s heading that way.
That’s growth: amid the monthly cascade of economic stats from China this week, one stood out: Chinese electricity output was more than 21% above a year ago in April (which was weak). Power once made, can’t be stored in huge amounts if there are no users. It is consumed. That is the best measure of the current strength of demand in China’s economy.
Transurban watch: CP2 (no, not a Star Wars action figure) is upset at the Transurban board for rejecting the latest takeover offer from it and its big Canadian mates, the Canadian Pension Plan Investment Board and the Ontario Teachers Pension Plan (The duo used to be besties with Macquarie on infrastructure deals here and offshore). CP2 has about 15% of Transurban, worth about $1 billion, which isn’t to be dismissed. But it seems from the comments, CP2 and the Canadians don’t like the idea that Transurban went to shareholders for more than half a billion to finance the purchase of the Lane Cove Tunnel in Sydney for $635 million.
Transurban, still watching: CP2 and its new besties argue that Transurban should have raised half a billion in new debt, rather than the share issue, which will cut their stake in the group from a combined 42% to 39%. So they didn’t take up any of the shares, but other big holders did, knowing a bargain. CP2 said Transurban overpaid for the tunnel by $100 million. If CP2 folk are so clever (and its website assures us they are, why didn’t they negotiate with the tunnel’s receivers and drive down the price themselves, it is an infrastructure investor. They have a former senior Transurban executive among their number? But where have CP2 and the Canadians been these past couple of years as investors have gone right off debt-funded deals in infrastructure companies? CP2 and its Canuck mates should put their shares where their mouths are and call an EGM and take on the board, especially chairman David “ABC Learning” Ryan. It could be amusing.
Who cares? Next Monday, Australian TV viewers will be able to watch the federal Budget being discussed by Rudd government finance minister Lindsay Tanner and shadow treasurer Joe Hockey. Who cares? The Budget is dead, Tony Abbott will labour mightily tonight, then its all over until the end of the financial year report in August and then the pre-election update, then the poll. A waste of a good hour of national TV. The Young Liberals will of course roll up and ask their usual questions without disclosing who they are.
South Korea booms: but the country’s central bank still left rates steady at a record low 2%. Exports are surging, the economy is growing strongly, house prices are going well, but the bank is reluctant to lift rates for two reasons. One is that it remains uncertain about the outlook, especially in Europe, an important market (China though is bigger for the country’s exporters) and there’s an ongoing brawl with the government about policy and rates. The conservative government doesn’t want to see a rate rises and for the past few months has sent a vice-minister of finance along to board meetings to “observe”.
Big oil, big f-ck-up: there were always suspicions that the huge Gulf of Mexico oil spill might turn out to have very different causes rather than just a simple oil well failure, fire and explosion that tragically killed 11 workers. Slowly, the real story is emerging and it isn’t pretty. First, the three main companies involved in the well, BP, the driller Transocean and services group Halliburton turned on each other in an unedifying spectacle before the US Senate on Tuesday and blamed the others for the problems and the disaster.
Big oil 2: but in a hearing before the US House of Representatives, solid evidence emerged of the f-ck-ups involved in the well. The hearing exposed Tuesday’s effort in the Senate for the grand standing it was. Yesterday’s hearing revealed more than 100,000 pages of documents obtained from the companies involved in the well. The FT said that the reports suggested BP and Transocean executives “overlooked warning signs and then disagreed on what to do about them … the revelations, contained in more than 100,000 pages of documents obtained from the companies involved, also showed that the blow-out preventer had been extensively modified in ways that BP did not appear to recognise as the leak began.” I can hear the liability lawyers breathing very fast and shallow at the revelations from this hearing.
Big oil 3: more worrying though is the report that the well failed a pressure test only hours before the explosion. California Democrat Henry Waxman said the oil company (BP) told the Energy and Commerce subcommittee that the well failed a key pressure test just hours before it exploded on April 20 … “The test indicated pressure was building up in the well, which could indicate oil or gas was seeping in and could lead to an explosion,” said Waxman. “Yet it appears the companies did not suspend operations, and now 11 workers are dead and the Gulf faces an environmental catastrophe,” he said, asking why work wasn’t stopped on the well.” Good question.