Friday, August 31

Credit Aggregates July 2012

The RBA has released the credits aggregates for July 2012. While credit is growing (albeit slowly by historical standards), it looks like a decline in the growth rate for business and a decline in the aggregate for personal credit. The drop in the business lending growth rate will be something to watch in the next release of this series.

Let's use a Henderson moving average to look at the trends ... the HMA is pretty much ignoring the last data point above in the owner-occupier housing series, and downplaying the last two data points for business credit - but as they say in the classics, "one data point is interesting, two is a coincidence, three is a trend".

Unpacking a littler further we see ...

The actual aggregates ...

Thursday, August 30

ABS Dwelling Unit Approvals - by state

Rather than compare the month-on-month seasonally adjusted results (which are extremely volatile) it is interesting to look at the last couple of years for each state and where that sits in terms of the long-run history for the jurisdiction.

In that context, Victoria appears an outlier. While well down on its 2009-2011 record-breaking splurge, the trend number of monthly approvals is still above the long-run average. This is odd, given the broader commentary that suggests the Victorian dwelling market is over-supplied.

The ABS does not produce a trend and seasonally adjusted series for the Northern Territory or the Australian Capital Territory.

Update: I have been looking at Table 20 from the ABS, which reports on the types of dwellings that were approved each month. The tables appears to be only available in the original series, so I have undertaken my own seasonal adjustment. Note that semi-detached includes terrace houses and town-houses; and apartments includes flats and units.

And back to post-GFC peak gloom

Wednesday, August 29

Gloom see-saw tipping towards more gloom

It looks like we are entering the pessimistic end of the cycle on Australian bond markets. My indicator of yield inversion in the medium to long term bond rates suggests another round of pessimism is setting in. (Data from RBA table F2)

Saturday, August 25

The Baltic has landed

After five weeks of decline, the Baltic Dry Index reached a minima on Tuesday at 709 points. This was above its minima of 647 points on 3 February 2012 . It was also above its post-GFC minima of 663 points on 5 December 2008.

Unemployment payments growing

Payments for the unemployed are growing. Yesterday DEEWR released its payments data for July 2012. From June to July 2012, the number of Newstart recipients rose from 580,807 to 586,745 claimants. An increase of almost 6000 claimants or one per cent. The growth in New South Wales, Victoria, Western Australia and Tasmania was at two per cent or higher.

The positive growth in the number of newstart claimants at this time of the year is seasonally unusual. For example, in the next chart compare the period April to July in 2011 with the same period in 2012.

Not surprisingly, if we apply a seasonal decomposition to the DEEWR data, this growth is showing up as growth in the seasonally adjusted series.

If we add together the Youth Allowance Other and New Start Total payments - we have a rough proxy for the number of people who are unemployed. In raw terms, there is some divergence between the trajectory of this rough proxy and the official ABS count in recent months.

Even comparing the ABS seasonally adjusted series and our seasonally adjusted series for DEEWR we can see some divergence in recent months.

I suspect this divergence deserves a "glass half full" explanation. The ABS seasonally adjusted unemployment count jumped up a bit in July and August 2011. The DEEWR payments data is a typically slower to move than the ABS data. It is only now moving back to its long-term average of some 30,000 claimants above the ABS unemployment series.

To put it bluntly, I am not convinced that this recent increase in unemployment payment claimants presages an increase in the official unemployment rate. The official count of unemployment persons may go up in the future, but the latest DEEWR data is not the smoking gun. The DEEWR data is a lag indicator, not a lead indicator.

For completeness, comparing the official ABS trend with the trend of this rough proxy gives us the following. The lag nature of the DEEWR data is clearly evident around the GFC between 2008 and 2010.

The usual caveats apply: The DEEWR payments data is not consistent over time. From time to time the government changes the eligibility requirements for payments. This means the series suffers from numerous subtle (and occasionally not so subtle) series breaks. At the most extreme, it is possible that conclusions drawn from this data series are spurious.

Wednesday, August 22