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The Oxford Perspective - business news and views

21 June 2011

RBA GOVERNOR MISUNDERSTOOD?  

The Governor of the Reserve Bank of Australia (RBA), Glenn Stevens, is understood to be annoyed at the way the daily financial media used his monthly address last week to claim interest rates are set to rise in August. This, the RBA insists, is both misleading and misses the most important point of the speech which praised the overall state of the economy amid mainstream media reports of mainly gloom.

RATE RISE WILL 'DEVASTATE' MANUFACTURING

The Australian Chamber of Commerce and Industry (ACCI) reacted to last week's reported RBA rate increase warning with a rush lobby job on Canberra. The business group's message was a heavyweight claim that another rate rise as forecast in August would devastate the Australian manufacturing industry. The ACCI was not commenting on the outcome of its Canberra meetings.

CHINA WATCHERS TOLD YOU SO

This month's news that the Chinese economy has an inflation rate of 5.5 percent and rising, certainly proves what many analysts have been warning about this rocketing economy. But while they agree on the way its inflation rate will continue to rise, they disagree on the effects such inflation will have on Australia's favourable mineral sales with the Asian giant.

ABS SAYS MINING NOT THE ONLY JOB MACHINE  

The latest jobs figures by the Australian Bureau of Statistics (ABS) makes interesting reading in the way it downplays the importance of the booming mining sector. The report acknowledges the way the mining sector is dominating the economic policy landscape, but it goes to great lengths to promote the under-rated fact that most new jobs in Australia during the past decade have been outside the minerals sector. The ABS insists that decade saw around 140,000 new mining jobs created in a total national performance of 2.3 million new jobs.

Interestingly, the biggest creator of new jobs is the construction industry which put on an additional 400,000 during that period to take its total to over the million mark.

RETAIL PAIN SET TO STAY  

The present retail sales downturn is set to stay for at least the next six months, most retail analysts are saying. They say the problem is a combination of too many new retail sites and the levelling off of the economy with this winter's drop in consumer confidence. They all agree the rise in online sales is only a small aspect of the problem.

DELINQUENT LOANS TOO HIGH  

The binge house buying period of the past decade is now hitting home with the release of figures showing the number of delinquent home loans is the highest in 15 years. (This mortgage industry defines a delinquent loan as when the repayments have not been made for a specific time.) The hardest hit areas are in Sydney's west around Fairfield/Liverpool followed by south western Perth and the Gold Coast. At the opposite end of the scale, the areas of least problems are in Sydney's lower north shore along with the eastern suburbs and Melbourne's north.

NO SUCH THING AS A FREE LUNCH

The media went a little crazy lately when it was revealed how much people are prepared to pay for dinner with some of our top politicians, as part of a political party's fund raising. Well, just to put another dimension to this, in the USA someone bid nearly $2.4 million to have dinner with investment guru Warren Buffett.

WHEN TOO MUCH IS NEVER ENOUGH 

One of the strangest statements came from the former Governor of the RBA the other day and escaped the attention of the mass media. Ian Macfarlane said Australians "get too much news about the economy and this actually worsens the decisions we make about investments."

ALL EYES ON NEXT WEEK  

Monday June 27th may be just another day for most of the population but for the economics community, it is when the next set of official inflation figures are released. And if they are too high and outside the RBA's stated comfort zone of three percent, then the RBA is certain to include them as added pressure to lift the basic cash rate in early July or August.