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FUTURE PROOFING THE REGION
“Are we there yet?”UPPER HUNTER ECONOMIC UPDATE
Jenny Williams – Senior Research Fellow16 September 2014
FUTURE PROOFING THE REGION
Overview
Upper Hunter Region• A tougher year
– Labour market– Business performance– Consumption and housing
• “Are we there yet?” – Challenges and opportunities– Business and consumer confidence– Continued dependence on mining– Business use of Information and Communications Technology (ICT)– Economic outlook
Context • Global outlook• National economy
FUTURE PROOFING THE REGION
World economySTRONGER
SOURCE: St George Bank
%pa
FUTURE PROOFING THE REGION
0
4
8
12
2008 2009 2010 2011 2012 2013 2014 2015 2016
China GDP (actual & forecasts)
Source: Bloomberg Consensus Forecasts, June 2014
%
Actual
Forecasts
China’s economySTILL STRONG
SOURCE: St George Bank
FUTURE PROOFING THE REGION
Australian economyTRANSITIONING TO NON‐MINING
FUTURE PROOFING THE REGION
Australian economyHOUSING SECTOR DOING THE HEAVY LIFTING
SOURCE: St George Bank
FUTURE PROOFING THE REGION
0.40
0.60
0.80
1.00
1.20
40
60
80
100
120
Mar‐79 Mar‐89 Mar‐99 Mar‐09
AUD & the Terms of Trade
AUD /USD (rhs)
Terms of Trade (lhs)
Federal BudgetForecasts
SOURCE: St George Bank
Commodity prices fallingAUSTRALIAN $ STICKY
FUTURE PROOFING THE REGION
Macro contextMAIN FACTORS
World economy:• Growth in main trading partners• Risks balanced
Australian economy:• Growth in resource exports• Terms of trade weaker but AUD remains high • Housing leading non‐mining investment• Underpinning consumption growth• Labour market to remain soft into 2016
FUTURE PROOFING THE REGION
Upper Hunter labour marketWEAKER
FUTURE PROOFING THE REGION
20
22
24
26
28
30
32
JUN 04 JUN 06 JUN 08 JUN 10 JUN 12 JUN 14
'000
SOURCE: HRF; Department of Employment and Workplace Relations, Small Area Labour Markets
Upper Hunter Upper Hunter Region
Quarterly estimate
UPPER HUNTER REGION EMPLOYMENT NUMBERS
Upper Hunter labour marketWEAKER
FUTURE PROOFING THE REGION
1%
2%
3%
4%
5%
6%
7%
8%
9%
JUN 04 JUN 06 JUN 08 JUN 10 JUN 12 JUN 14
Upper Hunter Region
NSW
SOURCE: HRF; Department of Employment and Workplace Relations, Small Area Labour Markets
Hunter
UNEMPLOYMENT RATE – UPPER HUNTER REGION, HUNTER AND NSW
Upper Hunter labour marketWEAKER
FUTURE PROOFING THE REGION
0
400
800
1200
1600
2000
JUN 04 JUN 06 JUN 08 JUN 10 JUN 12 JUN 14
SOURCE: HRF; Roads and Maritime Service
Upper Hunter – annualised (lhs)
NEW COMMERCIAL VEHICLE REGISTRATIONS
Upper Hunter business investmentWEAKER
FUTURE PROOFING THE REGION
0
20
40
60
80
100
120
0
400
800
1200
1600
2000
JUN 04 JUN 06 JUN 08 JUN 10 JUN 12 JUN 14
SOURCE: HRF; Roads and Maritime Service
Upper Hunter – annualised (lhs)
NSW – annualised (rhs)
‘000
NEW COMMERCIAL VEHICLE REGISTRATIONS
Upper Hunter business investmentLAGGING NSW
Upper Hunter – annualised (lhs)
FUTURE PROOFING THE REGION
Upper Hunter business performanceNEARING BOTTOM OF CYCLE?
FUTURE PROOFING THE REGION
ConsumptionWEAKER, LAGGING
Upper Hunter (lhs)
FUTURE PROOFING THE REGION
ConsumptionSUBDUED 3‐MONTH OUTLOOK
FUTURE PROOFING THE REGION
ConsumptionSUBDUED 3‐MONTH OUTLOOK
0.0
0.1
0.2
0.3
0.4
0.5
JUN 06 JUN 08 JUN 10 JUN 12 JUN 14
SOURCE: HRF household surveys
December June
(-1 = decrease; 0 = neutral; +1 = increase)
UPPER HUNTER HOUSEHOLD SPENDING EXPECTATIONS
FUTURE PROOFING THE REGION
Housing sectorWEAKER, LAGGING
FUTURE PROOFING THE REGION
Upper Hunter challengesDIVERSIFICATION
FUTURE PROOFING THE REGION
Upper Hunter challengesCONTINUING COST PRESSURES
0
50
100
150
200
250
Jul-06 Jul-08 Jul-10 Jul-12 Jul-14SOURCE: Indexmundi
US$/t
THERMAL COAL PRICECOMPARATIVE PRODUCTION COSTS
FUTURE PROOFING THE REGION
Upper Hunter challengesE‐COMMERCE
FUTURE PROOFING THE REGION
Upper Hunter outlookNEARING BOTTOM OF CYCLE?
FUTURE PROOFING THE REGION
Upper Hunter outlookNEARING BOTTOM OF CYCLE?
??
??
FUTURE PROOFING THE REGION
We look forward to working together to creating a thriving Hunter Region for our
generation and those to come. Thank you
