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The Economy

Survey

2015 BusinessDay Economic Survey: How the BusinessDay forecasts got most things right in 2014

The unexpected took everyone by surprise. Illustration: Karl Hilzinger.

PETER MARTIN 12:55am What our panel got right about 2014 it got spectacularly right. What it got wrong was awfully wrong.

Survey

2015 BusinessDay Economic Survey: Economy weak, cash rate steady

Economic Survey - dink - dinkus

PETER MARTIN 12:53am Fresh from its success in forecasting correctly that the Reserve Bank would go a year without a moving its cash rate, the BusinessDay forecasting panel is predicting a second year of the same.

Survey

2015 BusinessDay Economic Survey: Economists temper banks' alarm over tougher capital rules

banking

CLANCY YEATES 12:52am Bank warnings that tougher capital rules threaten to damage the economy have failed to convince several leading economists, who say the impact will be minor at best.

CPI: How the ABS gets the measure of the inflation situation

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ROSS GITTINS 12:15am So, the Bureau of Statistics has spoken. But how does the bureau come up with its figures? And who believes them?

Comments

Rate Cut

2015 BusinessDay Economic Survey: Australian dollar plunges, Reserve Bank rate cut on the cards

Economists are split over whether the RBA will bow to domestic and international pressure to cut rates.

GARETH HUTCHENS 12:54am The Australian dollar has plunged to its lowest level since mid-2009, with speculation mounting that interest rates could be cut to historic lows next week.

Eco

Low petrol prices the same as two rate cuts: Deutsche Bank

The national retail petrol price has fallen to $1.157/litre as of January 18, from $1.541/litre a year ago, according to the Australian Institute of Petroleum (AIP).

JENS MEYER 1:00pm Lower petrol prices are putting the equivalent of two rate cuts worth of savings into the pockets of households, economists say.

Markets

2015 BusinessDay Economic Survey: Despite swings, flat year tipped for shares

Skin in the game brings better results: ASX requirements for independent board directors have been counterproductive, a new study claims.

STEPHEN CAUCHI 12:57am The Australian sharemarket could go as much as 10 per cent up or down over the coming year, Fairfax Media's survey of 16 economists shows.

Economy

Surging gas prices to prompt switch to electricity

Gas consumers in NSW are already facing price hikes of an estimated 40 per cent in their gas bills.

BRIAN ROBINS To head off the impact of the "inevitable price shock" from surging domestic gas prices, the NSW government should help households and businesses to switch to electricity, away from using gas, the Australia Institute said.

Tourism

Australia's open-door policy hurts domestic tourism: Qantas

Qantas is retiring its Boeing 767 fleet.

Jamie Freed Qantas says the government’s strategy of allowing air capacity to grow ahead of demand had come at a cost to the national economy.

Eco

Australian dollar surges as core inflation surprises

Falling petrol prices have helped headline inflation slip.

MARK MULLIGAN Headline inflation dipped below 2 per cent for the first time in two and a half years in the fourth quarter last year, giving scope to the Reserve Bank of Australia to cut interest rates.

Rising rents suggest some Australian retailers aren't up to it

Foreign stores such as Zara have helped push rents beyond the reach of some local retailers.

MICHAEL PASCOE Consumer confidence is weak, wages growth flat or negative, and retailers are complaining about online competition and wages. So why are retail rents soaring?

Eco

Business conditions worsen and sentiment flat

MARK MULLIGAN Business conditions deteriorated in December and sentiment was flat, according to the latest National Australia Bank's monthly business survey.

Too much tax? Middle income Australians pay 11 cents in the dollar, says the Australian Council of Social Service

Mr 50 per cent: Joe Hockey says Australians spend six months of the year working to fill the government's coffers, a claim disputed by a new report.

PETER MARTIN Australians pay far less tax than they believe a new report finds, and certainly far less tax than the Treasurer thinks they do.

Power

NSW warned of power blackouts, supply interruptions

BRIAN ROBINS NSW would face increased power blackouts and supply interruptions if power companies make planned cuts to their spending.

Insurance

Health cover costs could rise by up to 7 per cent

The 11 million Australians with private health cover will likely be hit by rises three times the inflation rate from April 1

Jessica Gardner The private health insurance industry expects new Health Minister Sussan Ley to approve increases in premiums as high as 7 per cent this year.

Economy

'Stuttering confidence levels' for businesses across Australia

In December, overall confidence levels for small business owners declined to 51 per cent from 53 per cent in October.

BRIAN ROBINS Small and medium sized businesses are signalling diverging trends, with a large improvment in sentiment in Victoria and Tasmania offsetting increased caution in both Queensland and NSW, the quarterly Sensis Business survey has found.

Economy

Westpac sticks with February interest rate cut call

Petrol prices dropping

STEPHEN CAUCHI The Reserve Bank should cut interest rates by 25 basis points when it meets on February 3, says Westpac chief economist Bill Evans.

Confidence

Business sector expects grim 2015, but Joe Hockey stays upbeat

Business owners are feeling grim after a fairly bleak Christmas period.

The business sector is pessimistic about 2015 after a bleak Christmas sales period.

Why everything you think about the economy in 2015 is probably wrong

The end: But some say the benefits of the mining boom to the average Australian have been greatly exaggerated.

TOM ALLARD Financial market convulsions, Budget red ink, Europe on the verge of recession, falling commodity prices. Is it all as bad as it looks?

Steadier jobs market means further rate cut unlikely

Interest rates on hold.

GARETH HUTCHENS The Reserve Bank is more likely to keep interest rates on hold in coming months thanks to signs of improvement in Australia’s labour market, according to economists.

Eco

Surprise drop in unemployment rate eases pressure on RBA

The number of people employed rose by 37,400 to 11.67 million in December, against market expectations of 5000 newly employed.

MARK MULLIGAN Australia's unemployment rate unexpectedly dropped in December, surprising economists and easing pressure on the Reserve Bank of Australia to cut interest rates this year.

Economy

Australia job vacancies hit two-year high

Job vacancies rose 2.6 per cent in the November quarter, following a fall of 0.4 per cent the previous quarter.

Job vacancies in Australia rebounded in the three months to November to hit their highest in two years, pointing to improving demand for labour.

World Bank cuts global growth forecast

Mystery moneymaker: CIS has become a cult figure among Japanese day traders. But only a handful of his peers know his real name, and no one has watched him work.

MAX MASON The World Bank has cut its forecast for global growth in 2015 thanks to a faltering recovery in the euro zone, tighter monetary policy in developed countries, and the prospect of a deep slowdown in emerging markets, despite an expected lift from lower oil prices.

Surging US dollar decides Australian sharemarket winners and losers

The Aussie is losing the popularity contest against the US dollar.

MAX MASON The Australian sharemarket barely managed to etch out a gain last year, but thanks to the surging United States dollar, companies with exposure to foreign earnings posted strong returns and are preparing to benefit even further.

Oil

Why OPEC keeps talking oil down, not up, even after prices halved

Saudi Arabia's Oil Minister Ali al-Naimi before OPEC's meeting in November. He has since repeatedly shrugged off suggestions that the world's biggest crude exporter might cut production to halt the rout.

Grant Smith If there ever was doubt about the strategy of the Organisation of Petroleum Exporting Countries, its wealthiest members are putting that issue to rest. These countries actually want - and are achieving - further price declines as part of an attempt to hasten cutbacks by US shale drillers and preserve their market share.

Economy

Retail sales miss expectations in November

DAVID JONES, RETAIL, SHOPPING,

MAX MASON Australian retail sales have come in softer than expected, inching just 0.1 per cent higher in November, but retailers hope that Christmas and Boxing Day sales will have boosted December numbers.

Rate cut

Growing number expect Reserve Bank of Australia to cut interest rates

The investment market tips an 80 per cent chance of an interest rate cut next month.

Ruth Liew The number of investors who expect the Reserve Bank of Australia to slash rates next month has increased more than sevenfold.

Economy

Cheap oil will fuel global economy: World Bank

Oil prices have more than halved from their 2014 peak.

MAX MASON The slump in oil prices is set to boost the global economy, with crude-importing countries expected to substantially benefit, says the World Bank.

Economy

Home approvals jump to record, in boost to growth

Encouraging news: The RBA has been counting on residential construction to create jobs as work on mega-mining projects winds down.

Australian approvals to build new homes surged to a record high in November as high-rise living becomes ever more fashionable and affordable, a trend that promises to underpin economic growth for some time to come.

Global economy

Falling prices are not benign for Europe

Europe's monetary union is in deep crisis.

Ambrose Evans-Pritchard The eurozone has let it happen. Europe's authorities have so mismanaged monetary and fiscal strategy that the whole currency bloc has tipped into deflation - with dire consequences.

Economy

It's going to be a slow year for our economy, Morgan Stanley warns

The Aussie dollar will slide to 76 US cents, the sharemarket will trade sideways and interest rates stay flat, the broker predicts.

STEPHEN CAUCHI Australia's economy will grow at the slowest rate since 2009 over the coming year, according to a pessimistic Morgan Stanley outlook for 2015. Interest rates are set to stay at a record low.

Trading

Currency traders on hottest winning streak in a decade

Up we go: Federal Reserve Chair Janet Yellen is preparing to raise interest rates this year.

Currency traders are starting 2015 on their hottest winning streak in a decade, thanks to the divergence of monetary policy across major economies.

Interest rates

Weak dollar, cheap petrol to keep interest rates on hold

Lower fuel prices are good news for businesses to help support their margins.

Vanessa Desloires A weak Australian dollar and low oil prices may provide the Australian economy with the boost needed to help keep the Reserve Bank’s finger off the interest rate trigger.

Economy

Weak dollar, falling petrol price could steady Reserve Bank's hand

Cheaper petrol prices may help keep the Reserve Bank of Australia's finger off the interest rate trigger.

Vanessa Desloires A weak Australian dollar and low oil prices may provide the Australian economy with the boost needed to help keep the Reserve Bank of Australia’s finger off the interest rate trigger.

Economy

Credit growth hits new five year high, boosted by housing investors

Lending to housing investors jumped 10 per cent, the strongest since March 2008.

Low interest rates have pushed annual credit growth in Australia to a new five-year high, boosted by lending to property investors.

Economy

Consumers reluctant to spend despite Christmas retail lift

Christmas shopping

Su-Lin Tan While retail sales in early December were up, consumers are anxious about spending.

Jobs

Friendly fire: Is the economy a victim of the Coalition's war on wages?

Peter Martin dinkus Dinkus

PETER MARTIN Like the punchline to a joke, Joe Hockey saved the best twist in the Coalition's war on wages until the end.

Wages

As the mining boom ends wages just aren't what they used to be

Sandra Bell (right) with her daughter Amy Bell with children Donlo Williams and Megan Smith.

LUCY CORMACK Sandra Bell loves her job in childcare, but at 66 years of age she could happily retire, if not for the one thing holding her back.

Economy

Swiss National Bank adopts negative interest rate

The Swiss National Bank said the effect on rates paid on individual savers' accounts  was beyond its responsibility. Interest rates paid to savers in Switzerland are already extremely low, so there is little room for further cuts.

David Jolly Switzerland's central bank is starting to charge banks to hold deposits, moving to push down the Swiss franc amid turmoil in global currency markets and deflation concerns.

Housing market coming off the boil, with growth set to slow in 2015

There are many variables when buying property, and every negotiation has subtle differences.

ELIZABETH KNIGHT After 2½ years of rising prices, the housing market appears to be running out of steam.

Policy of inaction on multinational tax

Federal Treasurer Joe Hockey.

MICHAEL WEST Joe Hockey can say what he likes. The outlook for any substantial action on multinational tax shifting is bleak.

Why higher petrol prices would be good for you, me and Joe Hockey

Will petrol prices take a plunge for the Christmas season?

MICHAEL PASCOE Joe Hockey's budget was deeply unpopular, but here's a sensible idea that the punters will hate even more.

Comments 62

Taxation

OECD slams Australian budget measures, 'close monitoring' required

Treasurer Joe Hockey: obsession with the budget deficit is impoverished, desperation thinking.

Peter Martin, Nassim Khadem The Organisation for Economic Co-operation and Development has taken aim at a raft of Australian budget measures, describing one as potentially unsustainable and another as needing close monitoring.

Comments 92

Budget warning: Treasury predicting thousands more job losses next year

Treasurer Joe Hockey has warned of further job losses next year.

GARETH HUTCHENS Treasury is predicting that thousands more people will lose their jobs next year than previously thought, and economists warn that much of the burden will fall on Australia’s youth

Comments 26

Economy

Interest rate cut: Reserve Bank board opens door to a discount

MATT WADE Economists are asking the question after a cryptic clue in the minutes of the board's December meeting.

Energy

Oil explained: why the price is falling and dragging the sharemarket down with it

Oil prices have fallen after OPEC cut its forecast on 2015 demand.

STEPHEN CAUCHI OPEC's decision to keep pumping out oil despite big price drops has had major ramifications for the global and Australian economies. What's going on?

Rates

RBA eyes rate cut bets in December meeting minutes

RBA governor Glenn Stevens.

MARK MULLIGAN The Reserve Bank has taken on board market expectations of an interest rate cut in 2015, but has given no indication yet that it is considering such a move.

Economy

Budget update may be further drag on consumer confidence

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VESNA POLJAK Treasurer Joe Hockey’s budget update has lent a further dovish element to the economic outlook which will support the case for interest rate cuts in 2015.

Commodities

Weak commodity prices, slowing China economy to hit federal budget

Coal

BRIAN ROBINS In its Mid-Year Economic and Fiscal Outlook, the government has slashed to 6.75 per cent its forecast for China's economic growth for 2015.

Hard times ahead for Generation Less

Rick Feneley and Gareth Hutchens Since World War II, Australians have assumed their children would enjoy a better standard of living than they did. That assumption has been correct – until now. Rick Feneley and Gareth Hutchens report.

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