Thursday, April 17, 2014

A Steep Bill For Australia’s Lost Youth

Australian society is failing its youth and setting itself up for economic disaster. The persistent rise in youth unemployment will reverberate across the economy for decades to come, potentially reducing productivity and limiting creativity and innovation.

Australia may have avoided a recession during the global financial crisis but good luck convincing Australia’s youth. For those graduating high school and university since 2008 opportunities have been limited and six years later conditions only continue to deteriorate.

The unemployment rate for 15 to 24 year olds has increased significantly since 2008, rising to around 12.5 per cent in February. But that severely understates the challenge facing today’s youth.

Since 2008 the participation rate has declined by over 5 percentage points and it’s now at its lowest level since the series began in 1978. The rapid and sustained decline in youth participation since the global financial crisis is larger than during the early 1990s recession.

To some extent the decline in participation rate may reflect higher university uptake. Many younger Australians, realising there are limited job prospects, either go or return to university to improve their skills.

The demand for skills continues to grow across the economy, particularly as entry-level jobs continue to disappear across a range of sectors. The demand for university degrees and advanced degrees grows by the day.

This news story is reprinted from www.businessspectator.com.au

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Australian Equities Market

THIS MORNING

In Australia the CBA Business Sales Index is issued together with new car sales, imports and the NAB March quarter business survey. In the US, the Philadelphia Federal Reserve survey is released together with weekly claims for unemployment insurance. In China, data on foreign direct investment is released.

OVERNIGHT MARKETS

US Equities

US sharemarkets rose on Wednesday as investors were comforted by comments from the Federal Reserve chief and US and Chinese economic data. The Dow Jones index rose by 162 points or 1.0% to the day´s high. The S&P 500 was up by 1.1%, while the Nasdaq rose by 52 points or 1.3%.

US long-term treasury prices were little-changed on Wednesday. US economic data was mixed, Chinese economic data was favourable and Janet Yellen reassured about Federal Reserve policy, prompting investors to embrace equities. US 2 year yields were steady near 0.371% while US 10 year yields were steady at 2.633%.

Major currencies were again mixed against the greenback in European and US trade on Wednesday. The Euro eased from highs near US$1.3850 to around US$1.3805, before ending US trade around US$1.3815. The Aussie dollar rose from lows near US93.40c to around US93.85c before finishing US trade around US93.70c. And the Japanese yen held between 102.15 yen per US dollar and JPY102,34 and was near JPY102.23 at the US close.

World oil prices rose on Wednesday. Investors dissected the latest Chinese economic data and watched the geopolitical situation in Ukraine. Brent crude was supported by worries that exports would resume quickly in Libya. Brent crude rose by US86c or 0.8% to US$109.60 a barrel while US Nymex rose by US1c to US$103.76 a barrel.

Base metal prices rose up to 1.8% on the London Metal Exchange on Wednesday with lead and aluminium leading the way although tin rose by just 0.3%. The Comex gold futures quote rose by US$3.20 an ounce or 0.2% to US$1,303.50 per ounce. Iron ore fell by US90c to US$116.20 a tonne on Wednesday.

YESTERDAY'S MARKET

Local Markets Update.

This news story is reprinted from www.comsec.com.au

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Economic Growth Looking Weak, Survey Shows

AUSTRALIA’S economic growth later this year may not get much stronger, as consumer sentiment and employment expectations remain weak.

The Westpac-Melbourne Institute Leading Index edged up to -0.09 per cent in March from -0.15 per cent in February.

Westpac chief economist Bill Evans says the index, which indicates the likely pace of economic activity three to nine months into the future, has stayed below zero for the second month in a row, indicating that economic growth will be below trend.

“The index has slowed markedly from the above trend pace of late last year,” he said.

“Since October, the Index has slowed from 1.21 percentage points (which is) above trend to 0.09 percentage point (which is) below trend.

“Major contributors to that slowdown were: the yield spread, the Westpac-MI Consumer Sentiment Expectations Index, dwelling approvals [and] the Westpac-MI Unemployment Expectations Index.”

Mr Evans said Westpac now was forecasting no more Reserve Bank of Australia interest rate cuts.

The central bank last cut the interest rate, to a record low 2.5 per cent, at its August board meeting.

“The Reserve Bank is currently forecasting growth at 3.5 per cent in 2015,” Mr Evans said.

“It will need to see the emergence of sustained below-trend growth in 2014 with little prospect of a lift in 2015 before it would contemplate lower rates.

“The modest below-trend growth in the index is, at this stage, insufficient evidence to prompt the bank to make such a call.”

This news story is reprinted from www.theaustralian.com.au

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We Want Lower Taxes, Abbott Says

Prime Minister Tony Abbott is playing down suggestions there will be tax increases in the budget.

The Australian Financial Review has reported the government is planning to increase some taxes and charges, as well as cut spending, when it hands down the budget on May 13.

There could be changes to some family payments and welfare supplements or a temporary rise in the Medicare levy.

But Mr Abbott says his government wants "lower taxes not higher taxes".

"The best way over time to ensure we get the tax burden down is to boost economic growth," he told reporters in Sydney on Wednesday.

Parliamentary secretary Josh Frydenberg said pre-budget speculation was often "wide of the mark".

Labor opposition MP Ed Husic said the government was talking out of both sides of its mouth.

"Whatever they said before the election cannot be believed," he told Sky News.

"They are clearly going to be breaking a whole bunch of promises."

Ahead of the September federal election, Mr Abbott told voters there would be "no cuts to education, no cuts to health, no change to pensions, no change to the GST and no cuts to the ABC or SBS".

The government has already flagged possible changes to the age pension regime and confirmed it will sell Medibank Private.

Treasurer Joe Hockey warned this week that no one group would be safe from cuts in the May budget.

This news story is reprinted from au.finance.yahoo.com

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Wednesday, April 16, 2014

Australian Equities Market

THIS MORNING

In Australia dwelling commencements data for the December quarter is released. BHP Billiton and Fortescue release quarterly production figures. In the US, the Beige Book, housing starts and industrial production figures are released. Federal Reserve chief Janet Yellen delivers a speech. In China, economic growth data is released together with retail sales, investment and production.

OVERNIGHT MARKETS

US Equities

US sharemarkets were volatile over the Tuesday session, rising at the open, retreating and then recovering. Shares in Coca Cola rose 3.7% and Johnson & Johnson rose by 2.1% after posting earnings results. The Dow Jones index traded over a near 210 point range before closing higher by 89 points or 0.4%. The S&P 500 was up by 0.7%, while the Nasdaq rose by 11.5 points or 0.3%. Shares in Intel rose 3% after the bell after its earnings beat forecasts.

US long-term treasury prices rose on Tuesday as investors embraced safe-haven bonds in response to rising tensions in Ukraine. US 2 year yields fell 1 point to 0.37% while US 10 year yields fell by 3 points to 2.623%.

Major currencies were mixed against the greenback in European and US trade on Tuesday. The Euro lifted from lows near US$1.3790 to around US$1.3830, before ending US trade around US$1.3810. The Aussie dollar fell from highs near US93.95c to around US93.35c before finishing US trade around US93.50c. And the Japanese yen strengthened from 101.95 yen per US dollar to JPY101.50 and was near JPY101.85 at the US close.

World oil prices eased on Tuesday as investors mulled geopolitical issues in Libya, Nigeria and Ukraine and US economic data. Brent crude fell by US33c or 0.3% to US$108.74 a barrel while US Nymex fell by US30c to US$103.75 a barrel.

Base metal prices fell up to 1.8% on the London Metal Exchange on Tuesday with copper and aluminium leading the way although other metals fell up to 0.7%. The Comex gold futures quote fell by US$27.20 an ounce or 2% to US$1,300.30 per ounce after the World Gold Council said Chinese demand would consolidate this year after record demand in 2014. Iron ore rose by US10c to US$117.10 a tonne on Tuesday.

YESTERDAY'S MARKET

Local Markets Update.

This news story is reprinted from www.comsec.com.au

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