Pete Wargent blogspot

Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), and CEO of WargentAdvisory (providing subscription analysis, reports & services to institutional clients).

5 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 finest property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete 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'.

"The level of detail in Pete's work is superlative across all of Australia's housing markets" - Grant Williams, co-founder RealVision - where world class experts share their thoughts on economics & finance - & author of Things That Make You Go of the world's most popular & widely-read financial publications.

"Wargent is a bald-faced realty foghorn" - David Llewellyn-Smith, MacroBusiness.

Saturday, 6 August 2016

Trade deficit widens...growth to slow in Q2

Deficit wider

The 27th consecutive trade deficit widened to $3.2 billion according to the ABS, although this was largely driven by a 2 per cent increase in imports. 

Although the cumulative deficit in the June quarter of $.74 billion was lower than that seen in Q1, net exports look set to subtract from growth in Q2. 

Throw in weak retail trade figures, and GDP growth in the second quarter appears likely to be slim at best. 

Exports fell by 1 per cent in the month of June, largely driven by a 15 per cent decline in the value of gold exports, after a bumper month last time around. The value of iron ore exports also fell in June.

Recent revisions have also made the services exports 'boom' appear less dramatic than previously had been thought, although the trend result has at least kept reaching record highs.

Despite an increase in the volume of exports, low oil prices have to date constrained the benefits of the $200 billion LNG investment boom. 

Looking at the rolling annual value of all merchandise exports, we can see that following sharp declines in iron ore and coal prices, total export values have at last flattened out. 

This is reflected in the value of merchandise exports to China, which have also flattened out after a sharp fall. Although exports to the US picked up, Japan is looking a bit sick here. 

State versus state

Total exports from Western Australia mirror the trends seen above closely, while Queensland is slowly beginning to benefit from its early LNG shipments.

With imports declining, Western Australia's trade balance is rising again, with Queensland the other major state to be in surplus territory. 

Tourism boom

Domestic demand has been weak in Australia of late, but at least some sectors are expanding.

In fact, AIG's sectoral performance indicators are reporting expansion (i.e. a reading of above 50) on each of its indices, including manufacturing (56.4), construction (51.6), and the massive services sector (53.9). 

Yesterday's arrivals and departures figures recorded yet another record in visitors to Australia from Chinese and Hong Kong, and this is reflected in a strong tourism services balance, with services overall improving from a low base. 

The wrap

Overall, a weaker result which points to net exports subtracting from growth in Q2.

It looks as though economic growth in the second quarter will be substantially slower, particularly given stalling retail trade growth.

The Reserve Bank's Statement on Monetary Policy was released yesterday and forecasts soft underlying inflation for the next couple of years, reflecting weak domestic demand, but GDP growth up at 3 to 4 per cent in the year to June 2018, and 3 to 4 per cent in the year to December 2018.