Mid-year update
Treasury released its mid-year outlook (MYEFO), and it didn't make for amazing reading.
The Budget is expected to return comfortably to surplus over the coming year and beyond, but there were downgrades for GDP and wage price growth.
Source: MYEFO
Apparently markets hadn't fully priced this in, as the odds of a rate cut in the new year jumped to become an each-way bet.
The forecasts were quite conservative, with only $55/tonne assumed for iron ore, which is a long way below prevailing spot price of well above $90/tonne.
So arguably there's potentially plenty of scope for further government spending if it's needed.
So arguably there's potentially plenty of scope for further government spending if it's needed.
There is also some welcome infrastructure spend in the post, and mining investment is now expected to lift, which is ultimately set to be good news for Western Australia and Queensland.
First homebuyers with only a 5 per cent deposit may get two bites at the cherry in 2020, as the MYEFO confirmed that the deposit scheme would allow for 10,000 guarantees in each financial year.
This means that 1 January and 1 July are set to be key dates for spikes in first homebuyer demand:
Source: MYEFO
Unemployment is expected to drift lower to 5 per cent over the next few years.
It's sad to see the lack of ambition in the commentary describing low wages growth as a 'new normal'.
Even the ailing Brits have seen earnings growth stomping back towards 4 per cent!
Interestingly, population growth is forecast to average 1.7 per cent per annum over the forecast period.
Given that the estimated resident population today is about 25,550,000 that equates to thunderous population growth approaching 450,000 per annum, which would in turn blow out to about 2¼ million over the next five years.
Which kind of puts building approvals running at just 13,000 per month in a different context.
Treasury announced that the next Intergenerational Report will be released in July 2020.
