Expectations Bulletin Pack (2)

7/30/2019 Expectations Bulletin Pack (2)

1/23


2/23

Inflation expectations trending below 2%yr

4

5

6

7

4

5

6

7 % ann% ann

trend median

0

1

2

3

0

1

2

3

Nov-96 Nov-00 Nov-04 Nov-08 Nov-12

2


3/23

No sign of a carbon price spike in expectations

4

5

6

7

4

5

6

7 % ann% ann

CPI

professionals trend

consumers trend

Spike higherpre GST

introduction

A realinflation spike

Carbon priceboosted expt.

to trend

-1

0

1

2

3

-1

0

1

2

3

Nov-97 Nov-00 Nov-03 Nov-06 Nov-09 Nov-12

Sources: ABS, Westpac Economics, Melbourne Institute

3


4/23

Spread of expectations continues to narrow

4

5

6

7

80

90

100

% ann%

CPI (rhs)

net balance (lhs)

Net balanceaverage since

95

The net balance is theshare of those who

think prices are risingless the share of those

thinking prices arefalling.

-1

0

1

2

3

40

50

60

70


Sources: ABS, Westpac Economics, Melbourne Institute

4


5/23

Labour market concerns ease a little

160

180

200

160

180

200 indexindexunemployment expectations

unemployment expectations trend

Sources: Westpac-MI

unemploymentexpected to rise

peak,Feb 09

80

100

120

140

80

100

120

140


unemployment

expected to fall

5


6/23


7/23


8/23

...but a bottoming in total employment.

1.0

1.5-40

-30

-20

-10

% 3mth% deviationSources: Westpac-MI, ABS* represented as deviation from full history average

-1.0

-0.5

0.0

.10

20

30

40

50Nov-98 Nov-02 Nov-06 Nov-10

unemployment expectations trend* (lhsleading 2mths)trend total employment (rhs)

total employment (rhs)

8


9/23

Unemployment expect. track hours worked...

3.0

5.0

7.0-30

-20

-10

0

% yr% inverted*represented as deviation from 10 year average

-5.0

-3.0

-1.0

1.010

20

30

40

50

Nov-97 Nov-01 Nov-05 Nov-09

unemploy. expectations 3mth ave*(lhs leading 3mths)

hours worked %yr (rhs)

Sources: Westpac-MI, ABS

9


10/23

...pointing to further near term weakness.

0.5

1.0

1.5-35

-25

-15

-5

% 3mth% inverted*represented as deviation from 10 year average

-1.5

-1.0

-0.5

0.015

25

35

45

55

Oct-97 Oct-01 Oct-05 Oct-09

unemploy. expectations 3mth ave* (lhs leading 2mths)

trend hours worked (rhs)

Sources: Westpac-MI, ABS

10


11/23

Job sentiment weakest in those not working

120

130

140

150

120

130

140

150 indexindex

working

unemploy/retired/not working

Long run average = 100

60

70

80

90

100

60

70

80

90

100


Sources: Westpac-MI

11


12/23

Paraprofessionals/trades most optimistic

120

130

140

150

160

120

130

140

150

160 indexindexmanager/prof

labourer/operator

paraprof/trades

sales/clerical

Unemployment expectations by occupation LR ave = 100

60

70

80

90

100

110

60

70

80

90

100

110


Sources: Westpac-MI

12


13/23

Workers in primary sector most nervous

120

130

140

150

160

110

120

130

140 indexindex

Primary Tertiary

Secondary Trade


60

70

80

90

100

110

60

70

80

90

100


Sources: Westpac-MI

13


14/23

Expectations similar by gender

120

130

140

150

160

120

130

140

150

160 indexindex

Male Female


60

70

80

90

100

110

60

70

80

90

100

110


Sources: Westpac-MI

14


15/23

Similar with or without children

120

130

140

150

160

120

130

140

150

160 indexindex

Live with children


16/23

Household type reveals little variation

120

130

140

150

160

120

130

140

150

160 indexindex

Tenant

Mortgagor

Owned

Unemployment expect by household type LR ave = 100

60

70

80

90

100

110

60

70

80

90

100

110


Sources: Westpac-MI

16


17/23

Other cities have now passed Syd & Melb

120

130

140

150

160

120

130

140

150

160 indexindex

Sydney

Melbourne

Remaining cities

Unemployment expectations by state LR ave = 100

60

70

80

90

100

110

60

70

80

90

100

110


Sources: Westpac-MI

17


18/23

as the labour market unravels in Qld & WA

140

160

140

160

indexindex

NSW WA

Vic Qld


60

80

100

60

80

100


Sources: Westpac-MI

18


19/23

Urban households now a bit more nervous

120

130

140

150

120

130

140

150 indexindex

Urban

Rural


60

70

80

90

100

60

70

80

90

100


Sources: Westpac-MI

19


20/23

Level of job worries = an easing cycle

80

100

1200

100

200

300 Index invert.bps

When unemployment expectations improve, theRBA tightens monetary policy

140

160

180

-500

-400

-300

-200

-100

Oct-00 Oct-03 Oct-06 Oct-09 Oct-12

annual change in RBA cash rate (lhs)

forecasts

unemployment expectations trend (rhs) Source: Westpac-MI

When unemploymentexpectation deteriorate, theRBA eases monetary policy

20


21/23

as does the pace of change in expectations.

-48

-32

-16

00

100

200

300 %yrbpsWhen unemployment expectations

improve, the RBA tightens monetary policy

16

32

48

64

80-500

-400

-300

-200

-100


annual change in RBA cash rate (lhs)

forecasts

change in expectations (rhs) Source: Westpac-MI

When unemploymentexpectation deteriorate, the

RBA eases monetary policy

21


22/23

Westpac Institutional Bank is a division of Westpac Banking Corporation ABN 33 007 457 141.Information current as at date above. This information has been prepared without taking account of your

objectives, financial situation or needs. Because of this you should, before acting on this information,consider its appropriateness, having regard to your objectives, financial situation or needs. Westpacsfinancial services guide can be obtained by calling 132 032, visiting www.westpac.com.au or visiting anyWestpac Branch. The information may contain material provided directly by third parties, and while suchmaterial is published with permission, Westpac accepts no responsibility for the accuracy orcompleteness of any such material. Except where contrary to law, Westpac intends by this notice toexclude liability for the information. The information is subject to change without notice and Westpac is

DisclaimerDisclaimer

later date. Westpac Banking Corporation is registered in England as a branch (branch numberBR000106) and is authorised and regulated by The Financial Services Authority. Westpac EuropeLimited is a company registered in England (number 05660023) and is authorised and regulated by TheFinancial Services Authority. If you wish to be removed from our e-mail, fax or mailing list please send ane-mail to [email protected] or fax us on +61 2 8254 6934 or write to Westpac Economics atLevel 2, 275 Kent Street, Sydney NSW 2000. Please state your full name, telephone/fax number andcompany details on all correspondence. 2011 Westpac Banking Corporation. Past performance is not a

reliable indicator of future performance. The forecasts given in this document are predictive in character.Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based arereasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks anduncertainties. The ultimate outcomes may differ substantially from these forecasts.

22


23/23

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Expectations Bulletin Pack (2)

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