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Australian Unemployment Jumps to 10-Year High; Aussie Drops – Bloomberg

Australian Unemployment Jumps to 10-Year High; Aussie Drops – Bloomberg.

By Michael Heath  Feb 12, 2014 11:04 PM ET
Photographer: Brendon Thorne/Bloomberg

Commuters ascend a flight of stairs at Martin Place in the central business district of Sydney.

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Australia’s unemployment rate climbed to the highest level in more than 10 years in January, spurring traders to pare bets on an interest-rate increase and sending the Aussie to its biggest drop in almost three weeks.

The jobless rate rose to 6 percent from 5.8 percent, the statistics bureau said in Sydney. The median estimate was an increase to 5.9 percent in a Bloomberg News survey of economists. The number of people employed fell by 3,700.

The softer-than-expected jobs report damped expectations the Reserve Bank of Australia will switch to tighter policy amid surging property prices, rising building approvals and a forecast acceleration in growth and inflation. Toyota Motor Corp., General Motors Co. and Ford Motor Co. have said they’re closing plants and shedding jobs in Australia as high production costs and a strong currency render them uncompetitive.

“While some may argue that employment is a lagging indicator, we would also suggest this print will be a negative for household income, sentiment and thus spending,” said Justin Smirk, a senior economist in Sydney at Westpac Banking Corp., which forecast the 6 percent unemployment rate. “In the details there is no silver lining.”

The Australian dollar fell to 89.43 U.S. cents at 3 p.m. in Sydney from 90.27 cents before the data’s release. Bets on how much the RBA will add to its cash rate in the next 12 months fell to 11 basis points, from 18 basis points yesterday, a Credit Suisse Group AG index based on swaps data showed.

Full-Time Fall

The number of full-time jobs declined by 7,100 in January, and part-time employment rose by 3,400, today’s report showed. Australia’s participation rate, a measure of the labor force in proportion to the population, was unchanged at 64.5 percent in January from a revised figure a month earlier, it showed.

The RBA cut the overnight cash-rate target by 2.25 percentage points between late 2011 and August to a record-low 2.5 percent to help offset the currency and spur industries outside mining, where an investment boom is waning.

Unemployment jumped to 5.1 percent in the resource-rich state of Western Australia, from 4.6 percent a month earlier. It jumped to 6.1 percent from 5.9 percent in Queensland. In the manufacturing hub of Victoria, joblessness climbed to 6.4 percent from 6.2 percent in December.

About 50,000 jobs in Australia’s auto and parts industry are in jeopardy after Toyota on Feb. 10 followed Ford and GM in announcing plans to quit manufacturing in the country.

Abbott’s Challenge

The decisions pose a challenge for Prime Minister Tony Abbott, who won an election last September pledging to restore confidence in the economy. The country’s main car plants are sited in districts where the jobless rate is already on par with the euro zone’s, and a waning mining boom is unlikely to soak up the additional labor.

“Over 60,000 full-time jobs have been lost since the Abbott government was elected,” opposition leader Bill Shorten told reporters in Canberra today. “What is the jobs plan of the Abbott government? What are they doing to stop the tens of thousands of jobs that are either going overseas or just disappearing?”

Consumer confidence fell 3 percent this month to the lowest level since July, a private report showed yesterday.

Unemployment in Melbourne’s Brimbank-Sunshine region adjacent to Toyota’s Altona plant and in the city’s Broadmeadows district that houses Ford’s main production lines was about 12 percent in September, according to government data. In the Adelaide suburb of Elizabeth where GM’s Holden has its main plant, it was 22 percent.

Commodity Currency

Manufacturing in Australia has been hurt by a commodities boom that helped drive the value of the local currency to $1.11 in July 2011, the highest level in the 30 years since exchange controls were dropped. While the Australian currency has since depreciated to about 90 U.S. cents, it’s still higher than at any point in the 18 years running up to 2007.

GM estimates it costs about A$3,750 more to produce a car in Australia than elsewhere. Ford said last May that its costs in the country were double those in Europe and four times those of its Asian divisions. The two carmakers will close their local plants in 2017 and 2016 respectively.

Even so, the RBA last week raised its inflation and growth forecasts, reflecting the currency’s decline from its peak last year, and reiterated its shift to a neutral policy stance. Low interest rates have driven up home prices and spurred a pickup in approvals for residential construction.

Home Prices

Sydney home prices jumped 13.8 percent in the fourth quarter from a year earlier, followed by Perth’s 8.7 percent, government data showed this week.

“For the RBA, these numbers are probably not a surprise,” said Su-Lin Ong, head of Australian economic and fixed-income strategy at Royal Bank of Canada in Sydney. “What it does suggest is that a market that’s starting to think about the possibility that the next move is up, and we may get a lift in cash rates later this year, these numbers argue strongly against that.”

To contact the reporter on this story: Michael Heath in Sydney at mheath1@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net

Australia to suffer biggest property collapse since Great Depression – Yahoo!7

Australia to suffer biggest property collapse since Great Depression – Yahoo!7.

7NEWSFebruary 7, 2014, 5:57 pm

The expert who predicted the global financial crisis has a dire warning for Australia’s property markets.

Melbourne, Sydney, Brisbane and Perth are on the verge of the most violent property collapse since the great depression, economist guru Harry Dent has said.

Speaking exclusively with 7News, the author, economist and property guru says as an entire country, Australia is the most over-valued real estate in the developed world.

“I think it’s probably going to go down at least 30 percent to kind of take off the bubble, [and] I think 50 percent down the road is even more likely,” Mr Dent said.

After London, Melbourne and Sydney are the most expensive cities in the world when housing prices are compared to earnings.

On average, Australians are shelling out more than ten times their annual income on a home.

“[Over] the next three to six years, we’re going to have a bigger GFC, we’re going to have the next Great Depression,” Mr Dent said.

“I think the most dangerous years are 2014 and 2015,” he said.

The American, who begins his Secure the Future speaking tour this week, was lambasted when he predicted the collapse of the Japanese economy when most economists said it would overtake the US as the biggest economy in the world.

He also accurately predicted the timing and severity of the 2008 Global Financial Crisis.

“An everyday person with a million dollar mortgage is going to go underwater,” Mr Dent said.

A lot of people are going to have a house worth less than their mortgage, and they apparently will not be able to refinance.

Leading analyst from Residex John Edwards disagrees with Harry Dent, and says if anything, our market is getting stronger.

Dent says his predictions are based on long-terms statistics on how Australians live and spend, and data from governments worldwide.

He says the key is to look to China, where almost a quarter of all new properties are sitting empty, and that cities like Shanghai could lose 85 per cent of their value.

“All it takes is something to burst the bubble,” he said.

“If China blows it’s going to have a much bigger impact than the 2008 GFC.”

Australian wildfires force thousands to flee – Asia-Pacific – Al Jazeera English

Australian wildfires force thousands to flee – Asia-Pacific – Al Jazeera English. (source)

Thousands of Australians were told to leave their homes as dry winds created the conditions for a firestorm in mountainous bushland outside Sydney, where firefighters have battled for days to bring dozens of wildfires under control.

More than 200 homes have been destroyed in New South Wales state since last Thursday, when bushfires tore through scattered communities to Sydney’s south and west, razing entire streets.

One man died after suffering a heart attack trying to protect his home.

Wednesday’s fire conditions were shaping up to be the worst so far in the state’s bushfire crisis, said Shane Fitzsimmons, the commissioner of the rural fire service.

“If you don’t have a plan, let me give you one,” said Michael Gallacher, the state’s emergency minister. “Get into the car, drive down to the city metropolitan area and let the firefighters do what they can do to protect the community, should this turn for the worse.”

Temperatures in the Blue Mountains west of Sydney are expected to reach up to 30C, while in Sydney itself they could hit 35C. Hot, dry winds gusting up to 100km/h are also expected, posing the greatest challenge to firefighters.

“This is the day where we’ve been receiving forecasts of the worst of weather for this week and that forecast is still staying with those predictions,” Fitzsimmons told reporters, warning of extreme fire conditions.

Al Jazeera’s Jonathan Gravenor, reporting from Katoomba’s Rural Fire Service, in the Blue Mountains, said there were more than 3,500 firefighters still battling fires in the region.

There were still 60 fires burning across the state on Wednesday, with 18 out of control, our correspondent said.

Authorities ordered schools in the Blue Mountains to be closed, evacuated nursing homes and advised people living in the area to leave before conditions deteriorated.

The Blue Mountains, whose foothills extend down to western Sydney suburbs such as Penrith, are populated with a mix of farmers, small business owners and white-collar commuters who make the trip into the city every day.

Known for their spectacular escarpments, eucalyptus forests and scattered small communities, they are a popular tourist spot for Sydney residents on weekends.

 

Australia bushfires destroy scores of homes – Asia-Pacific – Al Jazeera English

Australia bushfires destroy scores of homes – Asia-Pacific – Al Jazeera English. (source)

Firefighters in Australia are continuing to fight some of the worst bushfires to hit the country in a decade, preparing for worsening conditions.

In the Blue Mountains west of Sydney, one of the worst-hit regions in fire-ravaged New South Wales state, 300 homes have been either destroyed or damaged by the fire storm that peaked on Thursday, the Rural Fire Service announced on Saturday.

The damage toll is more than double the last count announced on Friday and will continue to rise as assessment teams and police move deeper into the destruction zone in search of survivors and victims.

Homes have been reported destroyed in other regions, but numbers are not yet available.

A 63-year-old man died of a heart attack on Thursday while protecting his home from fire at Lake Munmorah, north of Sydney. At least five others – including three fire fighters – have been treated in hospitals for burns and smoke inhalation, officials said.

Arson investigations

Arson investigators are examining the origins of several of more than 100 fires that have threatened towns surrounding Sydney in recent days.

The Australian military also said it was investigating whether a major blaze was linked to an explosives training exercise.

The bushfires have been extraordinarily intense and extraordinarily early in an annual fire season which peaks during the forthcoming southern hemisphere summer which begins in December.

This year’s unusually dry winter and hotter-than-average spring have led to perfect fire conditions.

About 1,500 fire fighters have been back burning to contain blazes since winds and temperatures became milder on Friday. Several roads in fire-affected areas north, west and south of Sydney have been closed.

On Saturday, 83 fires were burning across the state including 19 uncontained blazes.

Rural Fire Service Deputy Commissioner Rob Rogers described Saturday’s conditions as a “pause” before higher temperatures and increasing winds were forecast for Sunday.

“It’s just calmed down a little bit and obviously we’re bracing ourselves for these worsening conditions,” Rogers told Australian Broadcasting Corp. radio.

“What we have is a time for the crews to anticipate the weather coming ahead and try and get as much containment as possible and prevent that fire threatening major population centres when we get worse weather,” he said.

In February 2009, bushfires killed 173 people and destroyed more than 2,000 homes in Victoria state.

 

Petrol prices push inflation to highest since April 2012 | Business | guardian.co.uk

Petrol prices push inflation to highest since April 2012 | Business | guardian.co.uk.

 

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