Pete Wargent blogspot

Co-founder & CEO of AllenWargent property advisory, offices in Brisbane (Riverside) & Sydney (Martin Place) - clients include hedge funds, resi funds, & private investors.

4 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he is one of the better property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete Wargent is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.

"I've been investing for over 40 years & read nearly every investment book ever written yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and 'Code Red'.

"Pete's daily analysis is unputdownable" - Dr. Chris Caton, Chief Economist, BT Financial.

Invest in Sydney/Brisbane property markets, or for media/public speaking requests, email pete@allenwargent.com

Wednesday, 14 August 2013

Wages hit expectations; growing 3.0% y/y

Wages growth hit expectations growing by 0.7% q/q and 3.0% y/y.


Source: ABS

The slightly slower growth mirrors the slower overall growth in the economy in recent quarters.

As expected, the mining sector effectively led the way with wages growth (although some other sectors such as healthcare also did well, and in the public sector electricity, gas and waste services likewise), while wages in retail trade, education and training and real estate services remained weak.

In fact, the ABS numbers don't take account of bonuses, so the mining sector is likely to be stronger still. 

There are plenty of projects at or approaching the end of the construction phase for which very healthy completion bonuses are handed out (bonuses are not captured by the ABS data which is designed to represent the ongoing trend).

Private sector wages growth of 3.0% y/y was slightly higher than public sector growth of 2.9% y/y.

Wages growth of 3.0% is not particularly strong, but it is still growth.

As sure as night follows day, there will be people who cite examples of pay rises not being awarded over the last year or two, which obviously misses the point of ABS data.

The ABS selects a representative sample of employees and extrapolates the results to measure changes in the price of wages and salaries in the Aussie labour market. It doesn't expect to recognise that someone's brother's cousin's ex-boyfriend Kev in Rooty Hill got a pay freeze since June 2011 (except insofar as that is representative of the norm).

So, wages growing at a reasonable enough clip of 3.0% which will continue to push things along nicely.

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What on earth is happening to the iron ore price?! Up another 3% to US$141.80/tonne! A bit of volatilty is to be expected, but the movements in the past week have been extraordinary, perhaps driven by speculative trading.

At an exchange rate of 91 cents, that equates to an amazing A$ price of around $156/tonne.

It's highly unlikely that will last given the expected levels of production, but nevertheless a huge turnaround for the volatile and crucially important commodity price.

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Commonwealth Bank (CBA) delivered a massive record cash profit of $7.8 billion today together with higher dividends, which continue to reward long-term holders, which is now reflected in today's high valuation.

There was also a healthy 3.5% rise in Westpac's consumer confidence all the way up to 105.7 from 102.1. It won't be given much airtime though - it doesn't portray a gloomy enough picture.