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Business lending still looks very unhealthy.
SMH said:Australian businesses are planning to restock inventories as confidence in the economic turnaround continues into 2010, a survey shows.
Sales expectations for the March quarter have reached the highest level in six years, a Dun & Bradstreet business expectations outlook for the March quarter has found.
Expectations for growth in inventories are also up, at the highest level in more than four years, climbing one point to an index of five compared to the December quarter.
Sales and profits expectations showed an index rise of two points for sales and a rise of three for profit expectations while selling price expectations have fallen to an index of nine, the lowest level ever recorded during the survey's 21 year history.
Employment expectations also fell four percentage points to an index of zero while 31 per cent of firms reported a negative impact from credit card market conditions, showing a fall of six per cent.
Four per cent of executives expect wages growth to be the most significant influence on operations, while 19 per cent plan to reduce their current business debt levels in the upcoming quarter.
THE Reserve Bank's three consecutive rate rises and the winding down of the first-home buyers' grant have knocked the stuffing out of the housing market, with sales of new and established homes weak at the end of the year.
There was a 21.2 per cent fall in applications for new mortgages in December, according to Australia's biggest mortgage broker, Australian Finance Group.
Sales of new houses and apartments in November by members of the Housing Industry Association were 10 per cent below the peak touched in August.
"Three rate rises in a row was overkill for a vulnerable market, and the latest figures confirm our fears," AFG general manager Mark Hewitt said yesterday. Mr Hewitt said December was traditionally a slow month for housing sales, but the latest fall compared with a drop of 8 per cent in December last year.
Latest chart... property investors still appear to be returning...
Wouldn't bet on that, When Japan dropped the rates in early 90's they probably also thought it was for dire circumstances, well they are still sit at zero interest rates and Japan credit is still not expanding.
USA also is sitting at zero and credit is still expanding comparing to gdp, but it is at slowest pace in a very long time (mainly because gdp is shrinking). Australia "expansion", as you can see from shadows chart is not particulary strong and mainly also because of gov stimulus then rates.
I am not saying australia will stop expanding as well, but it is far from granted that will decouple from other major countries, specially on the interest rates.
when do you think Japan had a recession before the end of 80's? was very much like australia now and most people thought they were going to rule the world, decoupling from everyone else, running massive gdp increases every year forever etc.
the data say Japan total debt is decreasing and soon will be less then Australia.
About the saving rate or savings in general you can get a broad idea by: total debt going up against gdp no much savings in place. If you want to study deposit and money flow more in detail you can check the RBA financial aggregate where also Shadow got the data for his chart.
You can see M1 (currency + deposit stand at 251.2 bil$, offshore borrowing at 311 bil$ (and we even have a strong AU$ and those borowing are mainly in US$), then you can do a bit of study yourself comparing this data with M3, and you should do it for the past few years at least, etc.
Then, after you finish can you clarify what do you mean with this statement:
"Economic forecasting makes astrology look respectable" - or words to that effect (from Bernanke, Greenspan, Friedan or one of those ilk)
I posted somewhere else I think, that a study of the economic forecasters showed that their consensus view (presumably when the 'ayes have it') has an eighty percent success rate over time - so the consensus that the world is moving to recover (the general consensus) is 80 percent probable.
All predictions I've seen for Australia indicate the consensus is for continued growth - 80% chance that view is correct - now if you're talking 2011 then we'll need a new consensus.
Interesting chart - thanks Shadow.
I wonder what the neutral level of credit growth is for housing. It's not that much higher than it was in 2008 (when prices were falling), and yet most of Australia has double digit rises at present.
Investors seem to be coming back, but not in huge numbers. And the market looks very flat - could housing credit be about to drop off?
I'm also curious what the neutral level is in terms of the growth of lending to be reflected in rising prices. (i.e. How much of the growth in lending is down to re-mortgaging or re-financing properties, and how much is from buyers entering or moving up the market.)
I didnt need to look at all this statistics you quoted. It was quite plain in 'fed speak', as simple as read my lips.
Interest rates are going to at least a neutral setting. A neutral setting is 5-6%. Adjustments will be made for increased bank margins, but this is the neutral zone.