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Bentleys Client WA Economic Update 22nd of March 2017 Alan Langford, Chief Economist Bankwest
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Bentleys Client WA Economic Update22nd of March 2017
Alan Langford, Chief Economist
Bankwest
RBA SDR Commodity Prices and AUDUSD
Jan 90 92 94 96 98 00 02 04 06 08 10 12 14 Feb 1750
75
100
125
150
175
200
225
250
275
300
325
months
inde
x - J
an 1
990
= 10
0
AUDUSD
commodities
sources: RBA; Bloomberg
commodities trough to peak: 335%
XR trough to peak 115%from 50c to 108c
Jul 11XR daily since July 2016
16J A S O N D 17J F M
0.72
0.73
0.74
0.75
0.76
0.77
0.78
days
Iron Ore Exports
65 70 75 80 85 90 95 00 05 10 15 190
50100150200250300350400450500550600650700750800850900
30
40
50
60
70
80
90
100
110
120
130
140
150
160
years
volume (mt) real $A price (a)
solid lines are actual data; dotted lines are Bureau of Resources and Energy Economics (BREE) March 2014 forecasts/projections.
(a) notional nominal export prices derived by dividing total value by volume, then converted to real by deflatingnominal prices by 2000 tax-change-adjusted CPI
real price (right scale)
volume(left scale)
nominal weekly spot price
Jan 10 11 12 13 14 15 16 Mar 17405060708090
100110120130140150160170180190200
weeks
iron ore trade - 2016 (mt) exports imports
Aust: 846Brazil: 393Ukraine: 52Canada: 34
China: 1023EU: 136Japan: 131Korea: 67
US Natural Gas and WTI Oil Prices ($US)
Jan 90 92 94 96 98 00 02 04 06 08 10 12 14 16 Dec 1810
20
30
40
50
60
70
80
90
100
110
120
130
140
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
months
oil ($/barrel) gas (a)
gas
oil
Source: US Energy Information Agency (EIA). Solid lines are actual, dotted lines are EIA forecasts
(a) wellhead until 1996, Henry Hub since1997, both measured in $/million btu
source: Bloomberg
NYMEX gas futures weekly since 2014
Jan 14 Jul 15 Jul 16 Jul Mar 171.5
2
2.5
3
3.5
4
4.5
5
5.5
6
6.5
weeks
$/m
btu
Monthly Average Gold Price
Jan 70 75 80 85 90 95 00 05 10 Mar 170
100200300400500600700800900
1,0001,1001,2001,3001,4001,5001,6001,7001,800
months
$/ou
nce
$A only, daily - 2016, 2017
J F M A M J J A S O N D 17J F M
1,450
1,500
1,550
1,600
1,650
1,700
1,750
1,800
1,850
days
$/ou
nce
$US
$A
Source: Bloomberg
Nominal Australian Dollar Saleyard Cattle and Lamb Prices
75 80 85 90 95 00 05 10 15 220
50
100
150
200
250
300
350
400
450
500
550
600
650
years
cent
s/ki
lo d
ress
ed w
eigh
t
cattle
lambssolid lines are actual data (calendar years until1997, years ending June from 1997-98). Dottedlines are ABARES forecasts/projections
Source: ABARES
Australian Dollar Wheat Price (a)
75 80 85 90 95 00 05 10 15 2275
100
125
150
175
200
225
250
275
300
325
350
375
400
years ending June
$/to
nne
actual
(a) US hard red winter wheat, fob Gulf
ABARES forecasts/projections
APW pool return
10 11 12 13 14 15 16 17 18 19 20 21 22200
225
250
275
300
325
350
Eastern Market Indicator Wool Price
75 80 85 90 95 00 05 10 15 22200300400500600700800900
1,0001,1001,2001,3001,4001,5001,6001,700
years ending June
cent
s/ki
lo c
lean
actual
Jan 10 11 12 13 14 15 16 Mar 178
9
10
11
12
13
14
15
16
weeks
Source: Bloomberg
ABARESforecasts/projections
Source: ABARES
Western Market Indicator
Real Australian Dollar Wheat and Wool Prices
75 80 85 90 95 00 05 10 15 22200
250
300
350
400
450
500
550
600
650
700
750
800
850
8009001,0001,1001,2001,3001,4001,5001,6001,7001,8001,9002,0002,1002,2002,3002,4002,500
years ending June
wheat (a) wool (b)
(a) US hard red winter wheat, fob Gulf
solid lines are actual data. Dotted linesare ABARES forecasts/projections
(b) Eastern Market Indicator
wheat(left scale)
wool(right scale)
Sources: ABARES; ABS catalogue 6401.0
Real Australian Dollar Saleyard Cattle and Lamb Prices
75 80 85 90 95 00 05 10 15 22100
150
200
250
300
350
400
450
500
550
600
650
years
cent
s/ki
lo d
ress
ed w
eigh
t
cattle
lambssolid lines are actual data (calendar years until1997, years ending June from 1997-98). Dottedlines are ABARES forecasts/projections
Sources: ABARES; ABS catalogue 6401.0
WA's Population Growth Rate
75 80 85 90 95 00 05 10 15 200.75
1
1.25
1.5
1.75
2
2.25
2.5
2.75
3
3.25
3.5
financial years ending June
per c
ent
actual
Budget forecasts
sources:ABS catalogue 3101.0; Budget paper number 3
1309
03
89
DAEforecasts
Real Household Consumption - Annual Growth
Mar 87 89 91 93 95 97 99 01 03 05 07 09 11 13 Dec 16-1
0
1
2
3
4
5
6
7
8
9
10
quarters
per c
ent
trend estimates
source: ABS catalogue 5206.0
WA
rest of Australia
resources/population boom Mark1 ...
... and Mark2
WA only quarterly growth
Mar 12 13 14 15 Dec 160
0.25
0.5
0.75
1
1.25
1.5
1.75
WA's Share of National Population and Household Consumption
Sep 83 87 89 91 93 95 97 99 01 03 05 07 09 11 13 Dec 168
8.25
8.5
8.75
9
9.25
9.5
9.75
10
10.25
10.5
10.75
11
11.25
quarters
per c
ent
consumption (a)
population (b)
sources:ABS catalogues 5206.0; 3101.0
(a): trend estimates to Dec 2016
(b): to June 2016
Total Compensation of Employees - Annual Growth
Mar 87 89 91 93 95 97 99 01 03 05 07 09 11 13 Dec 16-4
-2
0
2
4
6
8
10
12
14
16
quarters
per c
ent
rest ofAustralia
WA
WA only quarterly growth
Mar 11 12 13 14 15 Dec 16-2
-1
0
1
2
3
4
source: ABS catalgue 5206.0
Real Household Disposable Income Per Capita (a)
90 92 94 96 98 00 02 04 06 08 10 12 14 1625
30
35
40
45
50
55
FYs ending June
$000
WA
Australia
(a) nominal income deflatedby all groups CPI for Perth andweighted average of 8 capitals respectively
sources: ABS catalogues 5220, 6401.0
National Net Saving as % of GDP
Mar 60 65 70 75 80 85 90 95 00 05 10 Dec 160123456789
1011121314151617181920
quarters
per c
ent
Household Saving Ratio
Mar 75 80 85 90 95 00 05 10 Dec 16-202468
101214161820
quarters
per
cent
50-yearaverage
trend estimates source: ABS catalogue 5206.0
25-yearaverage
Real Residential Construction Work Done ($billion)
Sep 80 85 90 95 00 05 10 Dec 160.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
2.2
2.4
4
5
6
7
8
9
10
11
12
13
14
15
16
quarters
WA rest of Australia
source: ABS catalogues 8752.0; 8755.0
seasonally adjusted WA(left scale)
rest of Australia (right scale)
nominal trend approvals
Jan 10 11 12 13 14 15 16 Dec 16
0.5
0.55
0.6
0.65
0.7
0.75
0.8
3
3.5
4
4.5
5
5.5
6
months
WA rest of Australia
Real Construction Work Done - WA
75 80 85 90 95 00 05 10 160
5
10
15
20
25
30
35
40
45
50
years
valu
e ($
billi
on)
source: ABS catalogues 8752.0; 8755.0
engineering only, quarterly
Mar 10 11 12 13 14 15 Dec 164
5
6
7
8
9
10
11
12
13
quarters
Valu
e ($
mill
ion)
engineering
residential
non-residential
seasonally adjusted
Real Non-Residential Construction Work Done ($billion)
Sep 80 85 90 95 00 05 10 Dec 16
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
2
3
4
5
6
7
8
9
quarters
WA rest of Australia
Source: ABS catalogues 8752.0; 8755.0
seasonally adjusted
WA(left scale)
rest of Australia (right scale)
Mar 10 11 12 13 14 15 Dec 160.7
0.8
0.9
1
1.1
1.2
1.3
1.4
1.5
1.6
1.7
5
6
7
8
9
10
quarters
WA rest of Australia
nominal trend approvals
Trend Unemployment Rates
Jan 80 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 Feb 172
2.53
3.54
4.55
5.56
6.57
7.58
8.59
9.510
10.511
11.5
months
per c
ent
WA
Australia
source: ABS catalogue 6202.0
WA Aust
Feb 16: 5.8 5.8
Jan 16: 6.4 5.8Feb 17: 6.4 5.8
Trend Underemployment Rates
Mar 78 84 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 Mar 172
2.53
3.54
4.55
5.56
6.57
7.58
8.59
9.510
quarters
per c
ent
Mar 08
source: ABS catalogue 6202.0
Sep 09
15-24: 18.025-34: 7.135-44: 6.345-54: 7.355+: 6.3all ages: 8.6
Mar qtr rates by state (%)
20172016
WA
Australia
Australia by age Mar 2017
NSW: 7.7 7.8Vic: 9.0 8.9Qld: 8.1 8.5SA: 10.4 9.9WA: 9.1 9.9Tas: 9.5 10.4 NT: 5.0 4.8ACT: 5.8 5.4Aust: 8.4 8.6
Trend Full-Time Employment Ratios
Jan 80 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 Feb 1767686970717273747576777879808182838485
months
per c
ent
source: ABS catalogue 6202.0
full-time employment as a percentage of total employment
WA
rest ofAustralia
Monthly - 2008, 2009
J F M AM J J A S O N D J F M AM J J A-0.3
-0.2
-0.1
0
0.1
0.2
0.3
Trend Annual Growth in Hours Worked
Jan 80 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 Feb 17-8-7-6-5-4-3-2-1012345678
months
per c
ent
source: ABS catalogue 6202.0
GFC WA
rest ofAustralia
WA monthly, 2015-2017
Jan 15 Jul 16 Jul Feb 17-0.6-0.5-0.4-0.3-0.2-0.1
00.10.20.30.40.5
Mining Employment - WA
Sep 85 88 90 92 94 96 98 00 02 04 06 08 10 12 14 Dec 1620253035404550556065707580859095
100105110115120
3
4
5
6
7
8
9
quarters
number (000) %of total
4-quarter moving average
source: ABS catalogue 6291.0
raw number since 2005
Mar 05 07 08 09 10 11 12 13 14 15 Dec 16404550556065707580859095
100105110115120125
num
ber (
000)
number(left scale)
% of total(right scale)
number at selected dates (000)
peak: 118,000 (Mar 13)current: 103,500 Dec 05: 47,600
Construction Employment - WA
Sep 85 88 90 92 94 96 98 00 02 04 06 08 10 12 14 Dec 1640
50
60
70
80
90
100
110
120
130
140
150
160
6.5
7
7.5
8
8.5
9
9.5
10
10.5
11
11.5
quarters
number (000) %of total
4-quarter moving average
source: ABS catalogue 6291.0
raw number since 2005
Mar 05 07 08 09 10 11 12 13 14 15 Dec 1690
100
110
120
130
140
150
160
170
num
ber
(000
)
number(left scale)
% of total(right scale)
Office Vacancy Rates
Jan 90 92 94 96 98 00 02 04 06 08 10 12 14 Jan 1702468
10121416182022242628303234
half-years (January/July)
per c
ent
source: Property Council
Jul 08 (0.3%)
Jul 10 (10.6%)
Jan 93(31.8%)
Jul 04(13.9%)
PerthCBD
West Perth
Jan 17Syd: 6.2Mel: 6.4Bris: 15.3Per: 22.5Ade: 16.2Hob: 8.2Dar: 22.5Canb: 12.6
Federal Funds Rate
Jan 55 60 65 70 75 80 85 90 95 00 05 10 Mar 170
2
4
6
8
10
12
14
16
18
20
months
per c
ent p
er a
nnum
first oil shock
second oil shock
Oct 87 stockmarket crash
tech wreck
start of sub-primemortgage bubble
GFC
LTCM
fears ofdeflation
source: US Federal Reserve
10-Year US Government Bond Yields
Apr 53 60 65 70 75 80 85 90 95 00 05 10 Mar 17123456789
1011121314151617
months
per c
ent p
er a
nnum
sources: US Federal Reserve, Bloombergdaily since July 2016
16J A S O N D 17J F M1.31.41.51.61.71.81.9
22.12.22.32.42.52.62.7
days
taper tantrum
10-Year Government Bond Yields
Jan 80 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 Mar 17
23456789
1011121314151617
months
per c
ent p
er a
nnum
Australia
US
Australia only since July 2016
16J A S O N D 17J F M1.71.81.9
22.12.22.32.42.52.62.72.82.9
33.1
days
sources: RBA, Fed, Bloomberg
90-Day Bank Bill Yields
Jan 70 75 80 85 90 95 00 05 10 Mar 17123456789
10111213141516171819202122
months
per c
ent p
er a
nnum
source: RBA
daily - 2016, 2017
16J F M A M J J A S O N D 17J F M1.7
1.751.8
1.851.9
1.952
2.052.1
2.152.2
2.252.3
2.352.4
days
Australian Dollar Against US Dollar
77 85 90 95 00 05 10 15 220.45
0.5
0.55
0.6
0.65
0.7
0.75
0.8
0.85
0.9
0.95
1
1.05
1.1
1.15
1.2
years ending June
$US
per $
A
GFC
sources: RBA, Bloomberg
ABARESassumptions
US Dollar Trade-Weighted Index
Jan 73 80 85 90 95 00 05 10 Mar 1765707580859095
100105110115120125130135140145150
months
Mar
ch 1
973
= 10
0
daily - 2016
Jan Feb Mar92.5
93
93.5
94
94.5
95
95.5
96
96.5
days
source: US Federal Reserve
Mar 85
Apr 95
Feb 02
Australian Dollar Against Chinese Renminbi (yuan)
Jan 84 88 90 92 94 96 98 00 02 04 06 08 10 12 14 Mar 171.5
2
2.5
3
3.5
4
4.5
5
5.5
6
6.5
7
months
yuan
per
$A
daily since July 2016
16J A S O N N D 17J F M4.95
5
5.05
5.1
5.15
5.2
5.25
5.3
5.35
dayssources: RBA; Bloomberg
Net Short-Term Overseas Departures and Exchange Rate
Mar 85 88 90 92 94 96 98 00 02 04 06 08 10 12 14 Dec 16
-400
-300
-200
-100
0
100
200
300
400
500
600
45
50
55
60
65
70
75
80
quarters
net departures (trend estimates) Exchange Rate (a)
net departures (left scale)
sources: ABS catalogue 3401.0; RBA(a) trade-weighted index (TWI) value of the Australian dollar
TWI(right scale)
zero net departures line
Net Education Credits and the Exchange Rate
72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 160
1
2
3
4
5
6
7
0.5
0.6
0.7
0.8
0.9
1
1.1
1.2
1.3
1.4
1.5
years
education credits (a) AUDSUD
sources : ABS catalogue 3401.0; RBA
education(left scale)
AUDUSD (right scale)
(a) education credits as %of total exports of goods and services
Bentley Client WA Economic Update Any questions?
