The state of the economy at the street level

Tyler Durden said:

I have noticed a few shops pop up which seem to specialise in catering for the Chinese, selling things like baby formula, vitamins, pills, and some other things you could get at places like Chemist Warehouse. They have a very basic set up, just shelves with products and prices. No decorations, no special design of the place, no loud advertisements, just a very basic shop that looks like it could move on at any moment.

They seem to be fairly popular with the Chinese, and I think their prices are a little bit better than places like Chemist Warehouse. Not sure how they do it, but yeah.

An example is one in Burwood near the train station, on the same road and side as Hungry Jacks.

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Joules MM1 said:

11:30am AUD Building Approvals m/m actual -8.2% forecast -0.8% prev 2.3%

month over month

http://www.forexfactory.com/

next happy hour, tomorrow, 11am ProdPrice Q/Q

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As China’s economy slowed, Australia lost 34,000 mining jobs in the 12 months through May while adding 53,000 accommodation and food services positions, according to data from the Bureau of Statistics. The problem is that annual wages in the hospitality industry -- including for those working part time -- average A$26,832 ($19,585). That’s a fraction of the A$134,000 in the mining industry.

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With the construction phase winding down for LNG projects on Curtis Island, key contractor Bechtel is laying off approximately 600 employees per month.

Gladstone Observer reported that camps have already begun the decommissioning phase, and that the company is looking at offloading equipment and machinery, including $9 million worth of vehicles.

More than 26,000 workers have been employed at the QCLNG, APLNG and GLNG projects since the start of construction in 2011.

It is expected construction will be complete in 12 months, and that Bechtel will have completely demobilised by December 2016.

Bechtel general manager Kevin Berg…said that he expected workers to find employment in metals processing and mining industries.

“Historically when oil prices are low the metals and mines industry comes up, so I would hope we will see that happen again now,” he said.

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sydboy007 said:

I think Kevin Berg is dreaming, but hope to be proved wrong.

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Smurf1976 said:

Given that the LNG projects are directly harming the metals processing industry in particular, via increased energy costs (and energy is a major cost in metals processing), I think you're right there.

On the positive side, hopefully the revenue and royalties from the LNG does some good somewhere.

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sptrawler said:

This article in the "West Australian", tells you the state of the economy at street level.

https://au.news.yahoo.com/thewest/wa/a/29242790/police-blitz-as-suburban-crime-rises/

Stress levels rise, as cost of living rises and the economy weakens.IMO

Last month, home burglaries jumped by 18 per cent, car thefts by 18.5 per cent, theft by 21.1 per cent and property damage by 20.8 per cent.

There was also a major spike in domestic violence offences, up by an alarming 33.9 er cent.

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sydboy007 said:

WA has in many ways been in recession for 3+ years now. State final demand has been negative every quarter since midish 2012. That's not going to change until the CAPEX boom is finalised, then will probably barely grow for a period after.

The Roy Hill iron ore project will see 8,000 construction workers turn into 2,000 miners. At Gorgon, 9,000 construction workers will turn into 400 gaseous technicians, whereas at Wheatstone, 6,500 workers will shrink to around 400.

Factor in the death of the iron ore juniors, eventual death of FMG and possibly Roy Hill and things ain't pretty.

At least QLD has some tourism exports to partially help with the impending slump, though baristas don't earn nearly as much as a construction worker.

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sptrawler said:

I think I've been saying the same scenario for quite a while, I've lived here for over 50 years, seen the booms seen the busts.
The problem with this one is, the customer will end up owning the product, they have bottomless pockets.

I wouldn't be focussing on the best case scenario.

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skyQuake said:

I think twiggy would rather sink his own ship rather than let someone else steer it though.

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Moody’s Investors Service says that the performance of Australian auto loan asset-backed securities (ABS) deteriorated in the second quarter of 2015. Specifically, 30-plus day delinquencies rose to 1.47% in June from 1.24% in March and 1.10% in June 2014.

Since 2010, arrears performance in the second quarter of every year typically remained stable or improved from the first quarter, because by the second quarter, delinquent borrowers have usually caught up on their payments, following a temporary increase in arrears earlier in the year, after the holiday season.

By contrast, in this year’s second quarter, delinquencies climbed further across all auto loan ABS programs. We attribute the increase to a combination of factors, namely: (1) more loans becoming delinquent, (2) existing delinquent loans taking longer to become current, and (3) amortizing pools.

Despite the uptick in delinquencies, default and loss rates will remain steady at their current low levels…

Moody’s report notes that despite the deterioration in arrears performance, default and loss levels remain low. The most seasoned outstanding pools are from the 2011 vintage. As of the end of June, this vintage had a cumulative default rate of 2.0% and a net loss rate of 1.1%.

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We find a robust postcode-level relationship between growth in house prices and new passenger vehicle registrations. The relationship is robust to the inclusion of local-area fixed effects and the full set of control variables. In our preferred specification, we estimate an elasticity of new passenger vehicle registrations with respect to house prices of 0.4–0.5, with a relatively high degree of precision…

We estimate an average MPC for new vehicles of about 0.06 cents per dollar increase in house prices. (In general, we refer to new vehicle consumption…

Assuming new vehicle registrations and total consumption have the same sensitivity to changes in housing wealth implies an MPC for total consumption of 2 cents per dollar change in gross housing wealth.

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Our finding of heterogeneity in MPCs by income is consistent with a collateral constraints channel. Low-income households are more likely than high-income households to have low wealth, and so be subject to binding collateral constraints. This implies that a dollar increase in house prices is more likely to reduce borrowing constraints and raise consumption for low- than for high-wealth households…

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