Sydney creates the jobs
Today's CapEx release I'll look at later, but it was a fairly comfortable beat on expectations.
Interestingly investment was driven higher by a big lift in New South Wales, with CapEx plans for the year ahead also lifting rather nicely for investment in serviced industries.
Today's largely unreported detailed labour force figures showed Greater Sydney created a rip-snorting 117,000 new jobs on a net basis over the year to January 2019.
Sydney's annual average unemployment rate declined to just 4.2 per cent.
This is now close to the lowest level on record, and the latest figures point to further tightening still.
For many inner or eastern areas of Sydney such as Bondi, Waverley, Woollahra, Coogee-Clovelly, Erskineville-Alexandria, Pyrmont-Ultimo, and so on, the unemployment rates range from only 1 to 3 per cent.
So far, so good, although monthly unemployment rates of 7½ per cent for Perth and above 7 per cent for Hobart suggest that credit rationing is beginning to hurt.
So far, so good, although monthly unemployment rates of 7½ per cent for Perth and above 7 per cent for Hobart suggest that credit rationing is beginning to hurt.
In fact that holds true for most of the country away from Sydney and Melbourne, with oodles of slack in the jobs market away from the big capitals.
Credit rationing: touch too much
The credit figures for January 2019 I'd expected to be pretty weak given that they related to the period before the Royal Commission final report, and there was a further weak reading for monthly housing credit growth of only 0.2 per cent.
Housing credit growth figures should also be expected to be lower given that three-quarter of loans by value are now paying down principal.
But this was the weakest month in about 35 years as the screws have clearly been tightened too far.
There was zero growth in lending to property investors, which itself is quite an extraordinary result given the increase in dwelling supply, with growth to homeowners also now tailing off into the dirt.
Business credit growth was marginally better at 0.3 per cent in January 2019 (though that figure will probably slow further for small business given that small business owners tend to use housing as security).
But with personal credit growth contracting by -2.8 per cent over the year to January 2019 the figures were more than clear in their message: credit rationing now risks pushing Australia's economy into recession, and credit needs to be allowed to flow unless we want to unleash 'Armageddon lite'.
The monthly figure for personal credit growth was even more diabolical than expected at -0.63 per cent, the sort of monthly result which is basically unheard of outside of recessions or the global financial crisis itself.
Hopefully whoever's pulling the levers will also exercise some common sense with regards to interest-only resets through allowing borrowers to move onto 30-year P&I loans, otherwise the 30 to 50 per cent leap in repayments will send thousands of marginal borrowers into arrears.
Hmm!
