Expectations Bulletin Pack (6)

7/29/2019 Expectations Bulletin Pack (6)

1/23

ConsumerexpectationsInflation & unemploymentexpectation chart pack.

February 2013


2/23

Inflation expectations trending around 2%yr

0

1

2

3

4

5

6

7

0

1

2

3

4

5

6

7

Feb-97 Feb-01 Feb-05 Feb-09 Feb-13

% ann% ann

trend median

2


3/23

Carbon price boost small & temporary

-1

0

1

2

34

5

6

7

-1

0

1

2

34

5

6

7

Jan-98 Jan-01 Jan-04 Jan-07 Jan-10 Jan-13

% ann% annCPI

professionals trend

consumers trend

Sources: ABS, Westpac Economics, Melbourne Institute

Spike higherpre GST

introduction

A realinflation spike

Carbon priceboost very

small

3


4/23

Very few households expecting price rises

-1

0

1

2

34

5

6

7

40

50

60

70

80

90

100

Feb-98 Feb-01 Feb-04 Feb-07 Feb-10 Feb-13

% ann%CPI (rhs)

net balance (lhs)*

Sources: ABS, Westpac Economics, Melbourne Institute

average since1995

*% expecting prices to riseminus % expecting prices to fall

4


5/23

Labour market concerns, the trend has peaked

80

100

120

140

160

180

200

80

100

120

140

160

180

200


indexindex

unemployment expectations

unemployment expectations trend

Sources: Westpac-MI

unemployment

expected to rise

unemployment

expected to fall

peak,

Feb 09

5


6/23

but still points to a rising unemployment rate

80

100

120

140

160

180

200

-200

-100

0

100

200

300

400


indexannual change in unemployment rate smoothed (lhs)

unemployment expectations trend (rhs)

bps

Sources: Westpac-MI

unemployment

rising

unemployment

falling

6


7/23

Unemploy. expect map lack of real jobs strength

-150

-100

-50

0

50100

150

200

250-60

-40

-20

0

20

40


bps ttyunemploy. expectations (lhs leading 4mths)

change in employ/pop ratio (rhs)

% long run average Sources: Westpac-MI, ABS

7


8/23

Unemp. exp. improving in a trend sense ...

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0-30

-20

-10

010

20

30

40

50

Jan-99 Jan-03 Jan-07 Jan-11

% 3mth

unemploy. exp* (lhs leading 2mths)

trend full-time employ (rhs)

full-time employ(rhs)

% invertedSources: Westpac-MI, ABS*trend represented as deviation from 10 year average

8


9/23

...suggesting the jobs market is still precarious.

-1.0

-0.5

0.0

0.5

1.0

1.5-40

-30

-20

-10

0

10

20

30

40

50

Feb-99 Feb-03 Feb-07 Feb-11

% 3mth% deviation

unemployment expectations trend* (lhs

leading 2mths)trend total employment (rhs)

total employment (rhs)

Sources: Westpac-MI, ABS* represented as deviation from full history average

9


10/23

Unemployment expect. track hours worked...

-5.0

-3.0

-1.0

1.0

3.0

5.0

-50

-30

-10

10

30

50

Jan-95 Jan-99 Jan-03 Jan-07 Jan-11

% yr

unemploy. expectations (lhs leading 4mths)

hours worked %yr (rhs)


10


11/23

...pointing to further near term weakness.

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5-50

-40

-30

-20

-100

10

20

3040

50

Jan-95 Jan-99 Jan-03 Jan-07 Jan-11

% 3mth

unemploy. expectations* (lhs leading 1mth)trend hours worked (rhs)


11


12/23

Improved job sentiment amongst those in jobs

60

70

80

90

100

110

120

130

140

150

60

70

80

90

100

110

120

130

140

150


indexindex

working

unemploy/retired/not working

Sources: Westpac-MI

Long run average = 100

12


13/23

Big improvement for labourers/operators

60

70

80

90

100

110

120

130

140

150

60

7080

90

100

110120

130

140

150

160


indexindex

manager/prof

labourer/operator

paraprof/trades

sales/clerical

Sources: Westpac-MI

Unemployment expectations by occupation LR ave = 100

13


14/23

Expectations now similar by educational level

60

70

80

90

100

110

120

130

140

150

60

70

80

90

100

110

120

130

140

150


indexindexPrimary Tertiary

Secondary Trade

Sources: Westpac-MI


14


15/23

Slight gap between males & females now gone

60

7080

90

100

110120

130

140

150

160

60

7080

90

100

110120

130

140

150

160


indexindex

Male Female

Sources: Westpac-MI


15


16/23

Those without kids a touch more pessimistic

60

7080

90

100

110120

130

140

150

160

60

7080

90

100

110120

130

140

150

160


indexindex

Live with children


17/23

No gap between home ownership groups

60

7080

90

100

110120

130

140

150

160

60

7080

90

100

110120

130

140

150

160


indexindex

Tenant

Mortgagor

Owned

Sources: Westpac-MI

Unemployment expect by household type LR ave = 100

17


18/23

2013 improvement is ex Sydney & Melbourne

60

7080

90

100

110120

130

140

150

160

60

7080

90

100

110120

130

140

150

160


indexindex

Sydney

Melbourne

Remaining cities

Sources: Westpac-MI

Unemployment expectations by state LR ave = 100

18


19/23

Notable turnaround in mining states

60

80

100

120

140

160

60

80

100

120

140

160


indexindex

NSW WA

Vic Qld

Sources: Westpac-MI


19


20/23

Country dwellers more positive: rain effect?

60

70

80

90

100

110

120

130

140

150

60

70

80

90

100

110

120

130

140

150


indexindex

Urban

Rural

Sources: Westpac-MI


20


21/23

Lingering job worries = case for further easing

80

100

120

140

160

180

-500

-400

-300

-200

-1000

100

200

300

Dec-00 Dec-03 Dec-06 Dec-09 Dec-12

Index invert.

annual change in RBA cash rate (lhs)

forecasts

unemployment expectations trend (rhs)

bps

Source: Westpac-MI

When unemployment expectations improve, the

RBA tightens monetary policy

When unemployment

expectation deteriorate, the

RBA eases monetary policy

21


22/23

as does the pace of change in expectations.

-48

-32

-16

016

32

48

64

80-500

-400

-300

-200

-1000

100

200

300

Dec-00 Dec-03 Dec-06 Dec-09 Dec-12

%yr

annual change in RBA cash rate (lhs)

forecasts

change in expectations (rhs)

bps

Source: Westpac-MI

When unemployment expectations

improve, the RBA tightens monetary policy

When unemployment

expectation deteriorate, the

RBA eases monetary policy

22


23/23

Westpac Institutional Bank is a division of Westpac Banking Corporation ABN 33 007 457 141.

Information current as at date above. This information has been prepared without taking account of your

objectives, financial situation or needs. Because of this you should, before acting on this information,

consider its appropriateness, having regard to your objectives, financial situation or needs. Westpacs

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reliable indicator of future performance. The forecasts given in this document are predictive in character.Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are

reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and

uncertainties. The ultimate outcomes may differ substantially from these forecasts.

DisclaimerDisclaimer

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Expectations Bulletin Pack (6)