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Australian business activity best in 4 years, home prices jump
Topic Started: 12 Aug 2014, 03:08 PM (1,584 Views)
Mike
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http://www.reuters.com/article/2014/08/12/australia-economy-business-idUSL4N0QI12C20140812


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Business activity, confidence jump in well-regarded survey

* Home prices climb 1.8 pct in Q2, up 10.1 pct for year

* Housing stock rises A$492 bln in value, supports spending power (Adds house prices, reaction)

By Wayne Cole

SYDNEY, Aug 12 (Reuters) - A measure of Australian business conditions hit the highest in four years in July as firms reported a sharp pick up in sales and profitability, a promising start to the third quarter after a couple of disappointing months.

There was also upbeat news for household wealth as Tuesday's data showed growth in home prices topped 10 percent in the year to June, adding a massive A$492 billion ($456 billion) to the value of Australia's housing stock.

National Australia Bank's survey of more than 400 firms showed its index of business conditions jumped 6 points to stand at +8 in July, the highest since early 2010.

Firms were also feeling more confident, with that index rising 3 points to +11 led by strength in home construction and retailing.

The survey's measures of sales and profitability both climbed sharply, while there was a more modest improvement in employment. The pick up in activity also looked to have legs with the index of forward orders rising 4 points to +5, well above its long-run average.

The improvement would be welcome news to the Reserve Bank of Australia (RBA) which has held interest rates at record lows of 2.5 percent for an entire year to support the economy as a long boom in mining investment fades.

The central bank is a close watcher of the NAB survey, which has a good track record as a leading indicator of economic activity.

"Firms still appear unfazed by the Federal government's 'tough budget', possibly taking comfort in the bounce back in consumer confidence," said NAB's chief economist, Alan Oster.

"A solid jump in business conditions and better forward orders is supporting the relatively optimistic position."

The Liberal National government of Tony Abbott announced an unpopular budget of cuts and tax increases in May that took a heavy toll on consumer sentiment.

The mood has brightened since as many of the budget's more controversial measures have been stalled in a divided senate.

Confidence also has been bolstered by steady appreciation in home prices, long an obsession among Australians. The Australian Bureau of Statistics reported residential prices rose 1.8 percent in the second quarter, from the first when they increased by 1.5 percent.

That was the fifth straight quarter of strong gains and left prices up 10.1 percent on June last year.

The ABS estimated the total value of dwellings in Australia at almost A$5.2 trillion, more than three times the country's annual gross domestic product (GDP).

The expansion of home values has helped support spending in the face of subdued wages growth, while also encouraging a major recovery in home building. (Reporting by Wayne Cole; Editing by Shri Navaratnam)


Looks like a strong 2nd half of the year coming up.
http://mike-globaleconomy.blogspot.com.au/
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Count du Monet
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If Business lending is on the rise then that consumes the credit pile and means less for residential home lending. They operate inverse to each other, this is the reason why house prices remained flat in the 1990's.
The next trick of our glorious banks will be to charge us a fee for using net bank!!!
You are no longer customer, you are property!!!

Don't be SAUCY with me Bernaisse
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cokatoo56
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read carefully what the MSM say. Which companies did they include in their panel ? only the best performing ?
it's just like the dpt of labor and statistics who trick the stats to make the unemployment figures look good, so investments keep coming in, and investors still keep faith in that economy.

when i drive around Sydney, all I see is small businesses closing down, and big "for lease" signs for commercial spaces everywhere.
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Will
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cokatoo56
12 Aug 2014, 04:59 PM


when i drive around Sydney, all I see is small businesses closing down, and big "for lease" signs for commercial spaces everywhere.
It could be a Sydney thing, I know in Brisbane, everyone seems to be driving range rover evokes, those 265kw m benz cla things, c63 amg's, and of course Toyota 86''s are everywhere.

And then there are the cafés and restaurants seem quite busy, particularly at rosellea village and sunnybank.

The indooroopilly shopping centre has just has a massive expansion. And PAC fair down the Gold Coast is currently undergoing a 750m dollar expansion as well.

And the amount of construction of medium sized apartment blocks is quite surprising. Usually they are boutique style as well, no cheap stuff.
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herbie
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Will
12 Aug 2014, 05:43 PM
It could be a Sydney thing, I know in Brisbane, everyone seems to be driving range rover evokes, those 265kw m benz cla things, c63 amg's, and of course Toyota 86''s are everywhere.

And then there are the cafés and restaurants seem quite busy, particularly at rosellea village and sunnybank.

The indooroopilly shopping centre has just has a massive expansion. And PAC fair down the Gold Coast is currently undergoing a 750m dollar expansion as well.

And the amount of construction of medium sized apartment blocks is quite surprising. Usually they are boutique style as well, no cheap stuff.
We're flash us Brisbane dudes - Flash as rats with (borrowed/mortgaged) gold teeth ... :)

Here's hoping we don't end up being squashed flat as road killed cane toads on our bitumen highways maybe? - LOL!
Edited by herbie, 12 Aug 2014, 06:10 PM.
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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Ned Flanders
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Quote:
 
There was also upbeat news for household wealth as Tuesday's data showed growth in home prices topped 10 percent in the year to June, adding a massive A$492 billion ($456 billion) to the value of Australia's housing stock.


And here I thought the value of existing stock was a zero sum proposition. That is, as owners value goes up by $492B, borrowers income decreases by $492B (plus interest). Kind of like robbing the cradle to gold line the coffin.
Edited by Ned Flanders, 12 Aug 2014, 06:24 PM.
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" ... which is that all-too-familiar dynamic in Irish life where people tell lies, cover them up and create all sorts of collateral damage, sometimes spread out over decades, and never take responsibility."
- Alan Glynn
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peter fraser
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cokatoo56
12 Aug 2014, 04:59 PM
read carefully what the MSM say. Which companies did they include in their panel ? only the best performing ?
it's just like the dpt of labor and statistics who trick the stats to make the unemployment figures look good, so investments keep coming in, and investors still keep faith in that economy.

when i drive around Sydney, all I see is small businesses closing down, and big "for lease" signs for commercial spaces everywhere.
Actually it's pretty busy out there in the real world.
Not sure where you have been looking but business certainly is 'doing stuff"

Any expressed market opinion is my own and is not to be taken as financial advice
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Elastic
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peter fraser
12 Aug 2014, 07:47 PM
Actually it's pretty busy out there in the real world.
Not sure where you have been looking but business certainly is 'doing stuff"
I think if you look at the Australian economy right now, nearly all of the growth is related to population growth. All the infrastructure spending and housing construction is all related to population growth. I'm not sure how sustainable this model is and in relation to infrastructure spending you could see it as costing the economy. What annoys me is that the main beneficiaries of this population growth are the banks, supermarkets and REI, yet they are not bearing a proportionate cost.
Only a rat can win a rat race.

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Jimbo
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Elastic
12 Aug 2014, 09:44 PM
I think if you look at the Australian economy right now, nearly all of the growth is related to population growth. All the infrastructure spending and housing construction is all related to population growth. I'm not sure how sustainable this model is and in relation to infrastructure spending you could see it as costing the economy. What annoys me is that the main beneficiaries of this population growth are the banks, supermarkets and REI, yet they are not bearing a proportionate cost.
Very true and in the long term, population growth will make every square metre of earth in this country more expensive to own.

But there will be imbalances in this long term population growth that will generate price swings.

You can take it for granted that a 1000m2 parcel of Perth real estate will be more valuable in fifty years than it is now (in real terms). You could draw a line between now and 2044 and see a smooth path upwards.

Look at any market, real estate, commodities or stocks anywhere on the planet and on a long enough timescale they all show a smooth path upwards (apart from Tulips).

But as you shrink the timescale to years, months or even days, you will see a bumpy ride with peaks and troughs all over the place.

These bumps are where the money is made. You educate yourself by spending a long time in the market and you try and sell the peaks and buy the troughs. You learn to ignore those with vested interests in selling to you and you take more notice of what you see with your own eyes.

If someone is trying to sell you something they are doing one of two things. They are trying to offload something to you that they no longer want. Or, they are trying to get you to buy to increase the demand and value of their own asset. If a stranger tells you to buy magic beans that will make you rich, you don't buy them.

You can't be an engineer by reading the Wiki entry on Engineering and you can't make a fortune out of property by going to a 2hr seminar on property investment.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be :?: rising.
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Ned Flanders
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Elastic
12 Aug 2014, 09:44 PM
I think if you look at the Australian economy right now, nearly all of the growth is related to population growth. All the infrastructure spending and housing construction is all related to population growth. I'm not sure how sustainable this model is and in relation to infrastructure spending you could see it as costing the economy. What annoys me is that the main beneficiaries of this population growth are the banks, supermarkets and REI, yet they are not bearing a proportionate cost.
The standard of living only improves if productivity improves. Yes you can get economic growth through immigration, but it is not per capita GDP growth, just total GDP growth. In the situation where the economy is growing in size, but not in wealth, monopolies become more profitable through economies of scale, and they pay their executives and shareholders more, but their workers (relatively) less. That is why economic growth in only absolute terms always increases disparity of income and wealth. The top 5% increase their income and wealth through economies of scale and monopoly control of the market, but the other 95% see their incomes eroded through inflation.

As you can imagine, the top 5% cheer this type of economic growth on.
------------------------------
" ... which is that all-too-familiar dynamic in Irish life where people tell lies, cover them up and create all sorts of collateral damage, sometimes spread out over decades, and never take responsibility."
- Alan Glynn
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