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Data in Action

Finance Markets / Market Trends

Australia

Mar 06 2018

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While economic data releases over February generally show ongoing positive momentum in the Australian economy, financial market volatility plus slipping house prices and reduced online sales growth resulted in an increase in red 'traffic lights'.  The net balance that provides an indication of how the Australian economy is performing relative to the long-term average, slipped to +2 from +5 in February's edition. The number of green lights was steady on 10, but three orange lights turned red. (current relative to long-term averages).

Noteable results from the month included:

  • Employment continues to show solid growth;
  • Wage growth ticked up slightly. However, the relatively strong employment has yet to translate to stronger wages growth due to issues like globalisation, online trade and automation;
  • Bricks & mortar and Online sales slipped in December. Possibly as a reaction to strong November sales due to the Black Friday and iPhone X sales;
  • 10 year government bond yields continued to rise, up to 2.9% from 2.8% in January;
  • Stock and A-REITs markets slipped in February. Markets reacting to US volatility on factors such as potential US equity market overvaluation and rising inflation fears;
  • The financial market volatility spilled over to consumer sentiment. Sentiment slipped but remain above 100, indicating more positive than negative sentiment;
  • In contrast, business conditions and confidence, picked up with conditions near a 10 year high; 
  • Sydney house prices continue to decline. The price index now 0.5%, below where it was a year ago. Prices in other capital cities generally fell in Feb. Hobart the exception while prices did not change in Adelaide.

For commercial real estate markets, our top three key takeaways for this month are:

  1. Solid employment growth and strong business conditions positive for office demand;
  2. Consumer sentiment and wage data while moderately positive, provide little good news for the retail sector;
  3. Rising bond yields reducing relative value.

Download the full report here.

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