Inflation expectations lowest in 32 months

Inflation expectations ease

While the shots continue to be fired between the government and the central bank, in real time there's a growing risk of the economy sliding into the mire.

The NAB Survey is arguably the closest we have to a real-time read on the state of play, and business conditions slipped by another -3 points to a reading of 3 index points.

Business confidence fell almost across the board, with particularly weak confidence in the retail sector, and the overall reading for confidence fell by -5 points to a reading of -4 index points. 

Source: NAB

The monthly figures for prices tend to bounce around a lot, but the trend is clearly lower. 

Source: NAB Survey

Indeed, in separate news, ANZ/Roy Morgan's consumer confidence survey for September showed inflation expectations falling to a 32-month low of 4.6 per cent.

That's broadly consistent with hitting the inflation target (indeed, consumer price inflation was under target from 2018 to 2021):

Overall, the NAB Survey made for miserable reading, foreshadowing a slowdown in hiring and wages growth, 

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P.S. Whenever you’re ready…here are 5 ways I can help you manage your own money and go next level wealth:

1. Boom or Bust – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan - book in here

You also download a free copy of my e-book The Only 6 Ways to Become Wealthy here.

    2. Download our property buying guide

Download our free property buying guide here. 

You can also check out a few of our recent property investment purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    3. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with well over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    4. Subscribe for my free daily blog

Subscribe for my free daily blog with some 3.7 million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,500 followers. 

By the way, I'm a 7-times published author on finance and investing, so you can check out some of my books here.

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - follow our book release on Facebook here and at our Buy Right podcast series here. 

5. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

Munger's mental models #7: Get investing!

Mungers mental models

It's been a while since we looked at one of these, so let's take a look at the next in the series of Munger's mental models.

Check it out here (or click on the image below):

2-Sense: Is the Aussie property market going to crash?

2-Sense

Is this Betteridge's Law in action, or is the property market about to get smoked?

Batesy and I discussed this, and why property listings are actually lower than the media is reporting.

Tune in here (or click on the image below):

You can also watch the YouTube version here:

Interest rate cuts to begin as US jobs miss

Jobs miss

The US nonfarm payrolls report showed employment growing by a lower-than-expected +142,000.

Source: BLS

The unemployment rate held fairly steady as expected at 4.2 per cent.

However, there were downwards revisions to the preceding two months by a combined -86,000, taking the 3-month average for employment gains down to just +126,000 (and below 100,000 for the private sector).

A disappointing set of numbers for hiring, which saw the 2-year bond yield drop by around 7 basis points to 3.67 per cent.

Markets are pricing a 50 basis points cut this month by the Federal Reserve as 55 per cent likely (versus 45 per cent for a 25 basis points cut).

Lending for housing surges back

Housing lending advances

A bit of a turn-up, as the ABS reported home lending surging in July.

While still below the previous peaks, housing lending is up by a rapid +27 per cent from a year earlier.

Source: ABS

While housing prices have reportedly been easing in Melbourne, Canberra, Darwin, and Hobart, homebuyers have evidently been getting more active in the most populous states. 

Overall, owner-occupier lending was up by +3 per cent in July, and by +21 per cent over the year.

Source: ABS

Investor lending increased +5 per cent over the month and +35 per cent over the year.

While there's been plenty of discussion of landlords selling up in Victoria, on these numbers it looks like there are plenty of new landlords coming into the market as well.

Investors have also been coming back into the market with gusto in Sydney, Brisbane, and Perth by the looks of it.

Source: ABS

The average loan size hit a new record, but at least part of this is due to lower income earners being shut out of the market by lending restrictions.

While first homebuyer numbers were surprisingly robust, fuelled by government incentives and the bank of Mum and Dad, housing construction lending was again very disappointing, and declined further over the month.

James Foster ran through all the key details here.

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P.S. Whenever you’re ready…here are 5 ways I can help you manage your own money and go next level wealth:

1. Boom or Bust – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan - book in here

You also download a free copy of my e-book The Only 6 Ways to Become Wealthy here.

    2. Download our property buying guide

Download our free property buying guide here. 

You can also check out a few of our recent property investment purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    3. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with well over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    4. Subscribe for my free daily blog

Subscribe for my free daily blog with some 3.7 million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,400 followers. 

By the way, I'm a 7-times published author on finance and investing, so you can check out some of my books here.

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - follow our book release on Facebook here and at our Buy Right podcast series here. 

5. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

Sluggish economy on life support as policy tightens

Per capita recession

A quick rip through the economy's national accounts for the June quarter in the customary 7 charts.

At the headline level, Australia's economy grew again, just (by +0.2 per cent)....but that's partly been due to high rates of population growth.

GDP per capita, on the other hand, has been going backwards for 18 months now.

Over the 2024 financial year, headline GDP was about +1 per cent higher, but GDP per capita fell by -1.5 per cent.

The difference between the two lines is accounted for by the blazing population growth rate of about 2½ per cent.

Productivity is really struggling in Australia - perhaps not surprising given the incredibly slow nature of the return to the office - and other income measures in the Aussie economy have fared relatively poorly (and will most likely continue to do so well into FY2025).

Households struggling

Alongside near-record population growth, there's been plenty of inflation around, and in current prices terms the economy expanded by nearly 4½ per cent over the financial year.

That said, most of the consumer price inflation is likely in the rear-view mirror now.

The household saving ratio - a derived figure - was estimated to be just +0.6 per cent over both the March and June 2024 quarters respectively.

These are evidently very low figures, and they conceal that many households have now completely depleted their pandemic period savings.

Indeed, after accounting for all super contributions and mortgage payments, in aggregate households are increasingly coming under a lot of pressure now.

Although the cash rate target has been steady for a while, monetary policy is still tightening the noose on households, as fixed rate mortgages continue to reset to higher interest rates.

It's little wonder household consumption is going backwards and we're facing down a retail recession.

Australia has had a decent tailwind from the terms of trade over recent times, but looking ahead it seems likely that this could become a nasty headwind over the next financial year.

Indeed, commodity prices are generally under pressure.

The price of copper has dropped by more than 20 per cent from the highs, iron ore is under significant pressure as China's property market is unwinding, and the oil price yesterday fell to under $70/barrel.

Australia's key commodity prices were down by about -7 per cent over the year to August 2024.

There aren't too many positives here, and only government spending is saving Australia from an outright recession (as it is, we only have a per capita recession).

The economy appears highly likely to need the support of lower interest rates in 2025.

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P.S. Whenever you’re ready…here are 5 ways I can help you manage your own money and go next level wealth:

1. Boom or Bust – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan - book in here

You also download a free copy of my e-book The Only 6 Ways to Become Wealthy here.

    2. Download our property buying guide

Download our free property buying guide here. 

You can also check out a few of our recent property investment purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    3. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with well over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    4. Subscribe for my free daily blog

Subscribe for my free daily blog with some 3.7 million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,400 followers. 

By the way, I'm a 7-times published author on finance and investing, so you can check out some of my books here.

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - follow our book release on Facebook here and at our Buy Right podcast series here. 

5. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

ausbiz TV: Trend is the friend of the RBA

ausbiz TV

I joined Andrew at ausbiz TV to talk all the latest property market news.

Tune in here (or click on the image below):

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P.S. Whenever you’re ready…here are 5 ways I can help you manage your own money and go next level wealth:

1. Boom or Bust – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan - book in here

You also download a free copy of my e-book The Only 6 Ways to Become Wealthy here.

    2. Download our property buying guide

Download our free property buying guide here. 

You can also check out a few of our recent property investment purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    3. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with well over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    4. Subscribe for my free daily blog

Subscribe for my free daily blog with some 3.7 million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,400 followers. 

By the way, I'm a 7-times published author on finance and investing, so you can check out some of my books here.

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - follow our book release on Facebook here and at our Buy Right podcast series here. 

5. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

Resi building approvals turn the corner

Home approvals up

Detached house approvals are really surging back in Perth now, and it looks as though there is also a solid uptrend in place for Melbourne, as well as in Greater Brisbane…where supply is urgently needed.

Adelaide also now looks to be shaping upwards, but supply is really struggling in Sydney.

There were 2,000 attached dwelling approvals in Melbourne in July, but Sydney and especially Brisbane continue to record very low unit approvals figures. 

With home approvals turning a corner, there were around 14,800 approvals in July for the best seasonally adjusted result in more than a year, and the trend looks much healthier now.

In context, though, approximately 165,400 dwellings over the year was a modest bounce off 11¼-year lows.

Non-residential approvals had been exceptionally strong in 2023, but as infrastructure projects wind up approvals activity in this space is fading fast.

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In other news, the early partials for economic growth in Q2 look to be soft, as detailed by James Foster here.

Business operating profits and the national wages bill are following commodity prices lower, and inventories are set to subtract from growth in the June quarter, meaning that another soft result for GDP growth is likely.

Indeed, more broadly the Aussie economy appears to be slowing significantly.

Job ads fell for a 7th straight month in August to be down -23 per cent over the past year to a 3-year low, according to ANZ-Indeed. CommSec came forth with the relevant chart:

Meanwhile, the Melbourne Institute's monthly inflation gauge actually fell -0.1 per cent in August, and the reported annual trimmed mean inflation dropped from 2.5 per cent to 2.2 per cent last month, for a 32-month low.

If the official quarterly ABS inflation figures follow in anything like the same vein then Australia's hawkish monetary policy stance will be suddenly undertaking a remarkable volte-face.

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P.S. Whenever you’re ready…here are 5 ways I can help you manage your own money and go next level wealth:

1. Boom or Bust – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan - book in here

You also download a free copy of my e-book The Only 6 Ways to Become Wealthy here.

    2. Download our property buying guide

Download our free property buying guide here. 

You can also check out a few of our recent property investment purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    3. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with well over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    4. Subscribe for my free daily blog

Subscribe for my free daily blog with some 3.7 million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,400 followers. 

By the way, I'm a 7-times published author on finance and investing, so you can check out some of my books here.

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - follow our book release on Facebook here and at our Buy Right podcast series here. 

5. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.