Price & cost growth falls sharply

Retail and prices slow

Here's some terrific news which will please the central bankers, with the NAB Survey price and cost growth dropping sharply in December right across the board. 

Overall, the NAB Business Survey details were consistent with wages growth falling back to around 2 per cent ahead. 

Some price discounting is normal around Black Friday and Xmas, but there's also been a sharp fall in retail price growth, all the way down to 0.6 per cent in December.

Source: NAB Survey

Capacity utilisation is easing...and in a separate report from Jobs & Skills Australia, firms reported that recruitment difficulty has become progressively easier since 2022, and is now heading back to around pre-pandemic levels. 

In July 2022, three quarter of employers had some level of recruitment difficulty, but now the share has fallen to one-half (well, 51 per cent, down from 56 per cent in November). 

Source: Jobs & Skills Australia

Wages growth also to slow

In other news, SEEK's wage growth index also slowed to 4½ per cent over the year to December 2023. 

The annual growth in advertised salaries was materially pumped up by the Fair Work wages boost, but growth in recent months has tapered away to the extent that it won't be long before the annual rate of growth has dropped back to under 3½ per cent. 

With applications per job advertisement climbing rapidly, wages growth is surely set to slow in 2024.

Tax cuts backflip?

Finally, it seems that the boost from the Stage 3 tax cuts may not be quite as large as previously expected, though of course we'll have to wait for the final confirmation of this. 

It's not a good look for the ALP to go back on another earlier election promise, and any continuation this sort of thing may result in a minority government in the not-too-distant future...

Australia's top marginal rate of tax has kicked in at $180,000 for a long time.

Indeed, had marginal tax brackets been indexed to inflation since 2008 the top bracket wouldn't kick in until $260,000.

On a related note, I have a week in Dubai coming up...where there's no personal income tax. Sigh.

Overall, though, this was all further good news for lower inflation ahead, perhaps as already reflected in the marked shift in market pricing for interest rates since only three months ago.

Source: CBA

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The Australian Property Podcast will be back on the airwaves this weekend, with the latest 2-Sense segment due out early on Sunday morning.

We'll be discussing the outlook for 2024, new apartment defects and the housing supply conundrum, the impact of Stage 3 tax cuts...and more! 

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