The Experts

Australia's changing population

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by Craig James
 
In the coming week, the Bureau of Statistics will release the publication Australian Demographic Statistics for the September quarter. In simple terms the publication tells us how many people there are in Australia, and how population has changed over the quarter via movements in births, deaths and migration flows.

So it is timely that the Reserve Bank Deputy Governor, Philip Lowe, recently delivered a speech that highlighted changes in Australia’s population. And the Bureau of Statistics (ABS) recently focused on Migration in its Social Trends series.

Dr Lowe observed: “If the population is growing quickly, then the overall size of the market is getting bigger every year. This dynamism creates new opportunities and can increase the pay-off from taking a risk. And the increasing diversity of our population means that we have a constant influx of people coming to our shores, bringing with them new perspectives, new skills and new ideas.”

The ABS noted that net overseas migration to Australia (inflows less outflows of people) has outpaced natural increase (births less deaths) as a driver of Australia’s population each year since 2006. Now there are 5.3 million migrants in the country, representing just over a quarter (26 per cent) of the population. Of the rich OECD nations, only Luxembourg (42 per cent), Israel (31 per cent) and Switzerland (28 per cent) have bigger migrant populations.

Over the year to June 2013, Australia’s population rose by 407,000 or 1.79 per cent – the fastest population growth in around 3½ years, but below the 2.19 per cent growth pace in calendar 2008 (fastest in around 40 years).

The week ahead

If it wasn’t for the Reserve Bank, it would be a quiet week indeed for Australian economic data or events. There are three speeches from Reserve Bank officials in the coming week as well as the release of the Financial Stability Review. In the US, economic data is also in relative short supply.

In Australia, the week kicks off on Tuesday when Reserve Bank Deputy Governor Philip Lowe delivers a speech to the ASIC Annual Forum. He follows this up on Wednesday when he delivers introductory comments to the Centre for International Finance and Regulation conference. So far, topics for the talks haven’t been revealed.

Also on Wednesday, Reserve Bank Governor, Glenn Stevens addresses the 17th Annual Credit Suisse Asian Investment Conference in Hong Kong, China. The speech is delivered at 2.30pm Sydney time but so far no topic for the talk has been revealed.

And Wednesday is clearly a busy day for the Reserve Bank as the bi-annual Financial Stability Review (FSR) is released. The latest Board minutes have already noted results of the review. The minutes noted: “The Australian banking system continued to perform strongly and remained well capitalised.” Further, the major banks were regarded as “well placed to use internal capital generation to meet the higher capital requirements that they would face from 2016.”

There was also encouragement for Corporate Australia in the FSR: “Indicators of distress in the business sector continued to decline, particularly the amount of non-performing loans related to commercial property.”

On Thursday there are two key “big picture” indicators. The first is Population data for the September quarter. As the Reserve Bank points out, Australia’s population growth is one of the fastest in the world and that growth – especially via migration – underpins overall economic growth. If workers come to Australia because the skills aren’t available here, then income and spending levels are automatically lifted.

The other key economic data release on Thursday is the December quarter financial accounts. Not only does the release contain the latest household wealth figures but also estimates of foreign holdings of assets like shares and bonds and cash holdings by households, businesses and superannuation funds.

Turning attention overseas, the week kicks off on Monday with “flash” readings on manufacturing activity in China, the US, France, Germany and the Eurozone. In the US the Chicago Federal Reserve national activity index is also released.

On Tuesday the usual weekly data on chain store sales is issued.

On Wednesday the usual weekly data on home purchase and refinancing is issued with the S&P/Case Shiller home price series, consumer confidence data and the influential Richmond Federal Reserve survey. Analysts expect a modest lift in consumer confidence but slightly weaker home prices. Still, US home prices are up 13.4% over the year.

On Thursday, the usual weekly data on claims for unemployment insurance is released together with the final reading of economic growth for the December quarter. The quarterly GDP or economic growth data is published three times a quarter and economists expect annualised growth of 2.7% to be confirmed.

And on Friday in the US, personal income and spending figures for February are expected. Economists tip 0.3 per cent gains for both income and spending.

Also on Friday regional gauges of activity are expected: the Kansas City Federal Reserve survey and Dallas Fed surveys.

Sharemarket, interest rates, currencies & commodities

Some investors fear that they can’t stay on top of developments in the sharemarket without access to a rocket-powered piece of software. And then there is the added complication of learning how to use the software. But the internet has a raft of free services to help you stay on top of the market such as reports and videos (and, yes, CommSec is amongst those providing a raft of information).

And even in terms of finding out if the sharemarket is ‘cheap’ or ‘expensive’, there are tools at hand. Each week, the Financial Review publishes (courtesy of the ASX) weekly data on valuations (price-earnings ratios) and dividend yields for industry sectors and the market as a whole. And the recent data suggests that valuations have been returning to “normal” – long-term averages. In part this reflects the recent good profit-reporting season as well as the softening of share prices over March in response to global issues such as Ukraine and a slowdown in the Chinese economy.

So far, March can be considered a low volatility month on the sharemarket, which may appear surprising considering headline issues such as Ukraine, the economic slowdown in China and even the disappearance of the Malaysian aircraft. So far there has just been one day when the sharemarket has risen or fallen by over 1 per cent (March 14, a fall of 1.5 per cent for the ASX 200). Over the past 20 years, on average, there have been 5 days of moves above or below 1 per cent and the average for the past seven months has been three days.
 
Upcoming economic and financial market events

Australia

  • March 25 - Speech by Reserve Bank official - Speech by Deputy Governor Philip Lowe
  • March 26 - Speech by Reserve Bank official - Introductory comments by Deputy Governor Philip Lowe
  • March 26 - Financial Stability Review - Bi-annual assessment of the health of the financial sector
  • March 26 - Speech by Reserve Bank Governor - Speech in Hong Kong at 2.30pm AEDT
  • March 27 - Population figures (September quarter) - Births, deaths and migration data
  • March 27 - Financial accounts (December quarter) - Includes household wealth data

 
Overseas

  • March 24 - “Flash” China, US, Europe PMIs - Mid-month gauges of manufacturing activity
  • March 26 - US Home prices (February) - Prices are up 13.4% over the year
  • March 26 - US Consumer confidence (March) - A modest rise in confidence is expected
  • March 26 - US Richmond Fed survey (March) - Influential regional survey
  • March 27 - US Economic growth (Dec quarter) - Final reading: annualised growth of 2.7% to be confirmed
  • March 28 - US Personal income (February) - Income & spending are tipped to have risen 0.3%

 

Published: Monday, March 24, 2014

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