expectations bulletin pack (5).pdf

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Consumer

expectationsInflation & unemploymentexpectation chart pack.

January 2013



Inflation expectations trending below 2%yr

4

5

6

7

4

5

6

7% ann% ann

trend median

0

1

2

3

0

1

2

3

Jan-97 Jan-01 Jan-05 Jan-09 Jan-13

2



Carbon price boost small & temporary

4

56

7

4

56

7% ann% ann

CPI

professionals trendconsumers trend

Spike higher pre GST

introduction

A real inflation spike

Carbon price boost very

small

-1

0

1

2

3

-1

0

1

2

3

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

Sources: ABS, West ac Economics, Melbourne Institute

3



There are less household expecting price rises

4

5

6

7

80

90

100

% ann%

CPI (rhs)

net balance (lhs)

Net balance average since

95

The net balance is the share of those who

think prices are rising less the share of those

thinking prices are falling.

-1

0

1

2

3

40

50

60

70


Sources: ABS, Westpac Economics, Melbourne Institute

4



Labour market concerns, the trend has peaked

160

180

200

160

180

200indexindex

unemployment expectations

unemployment expectations trend

Sources: Westpac-MI

unemploymentexpected to rise

peak,Feb ’09

80

100

120

140

80

100

120

140


unemploymentexpected to fall

5



…and point to a rising unemployment rate.

160

180

200

200

300

400

index

annual change in unemployment rate smoothed (lhs)

unemployment expectations trend (rhs)

bps

unemploymentrising

80

100

120

140

-200

-100

0

100


Sources: Westpac-MI

unemploymentfalling

6



Unemploy. expect map lack of real jobs strength

100

150

200

250-60

-40

-20

bps tty

unemploy. expectations (lhs leading 4mths)

change in employ/pop ratio (rhs)

% long run averageSources: Westpac-MI, ABS

-150

-100

-50

0

500

20

40


7



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

0.5

1.0

1.5

2.0-30

-20

-10

0

% 3mth% invertedSources: Westpac-MI, ABS

*trend represented as deviation from 10 year average

-1.5

-1.0

-0.5

0.010

20

30

40

50Jan-99 Jan-03 Jan-07 Jan-11

unemploy. exp* (lhs leading 2mths)

trend full-time employ (rhs)

full-time employ(rhs)

8



...suggesting the jobs market is still precarious.

1.0

1.5-40

-30

-20

-10

% 3mth% deviationSources: Westpac-MI, ABS* represented as deviation from full history average

-1.0

-0.5

0.0

.

10

20

30

40

50Jan-99 Jan-03 Jan-07 Jan-11

unemployment expectations trend* (lhsleading 2mths)

trend total employment (rhs)

total employment (rhs)

9



Unemployment expect. track hours worked...

3.0

5.0

-50

-30

-10

% yr% long run averageSources: Westpac-MI, ABS

-5.0

-3.0

-1.0

.

10

30

50


unemploy. expectations (lhs leading 4mths)

hours worked %yr (rhs)

10



...pointing to further near term weakness.

0.5

1.0

1.5-50

-40

-30

-20

-10

% 3mth% long run averageSources: Westpac-MI, ABS

-1.5

-1.0

-0.5

0.0010

20

30

40

50Jan-95 Jan-99 Jan-03 Jan-07 Jan-11

unemploy. expectations* (lhs leading 1mth)

trend hours worked (rhs)

11



Job sentiment weakest in those working

120

130

140

150

120

130

140

150indexindex

working

unemploy/retired/not working

Long run average = 100

60

70

80

90

100

60

70

80

90

100


Sources: Westpac-MI

12



Managers & professionals most worried

120

130

140

150

160

120

130

140

150

160indexindex

manager/prof

labourer/operator

paraprof/trades

sales/clerical

Unemployment expectations by occupation LR ave = 100

60

70

80

90

100110

60

70

80

90

100110


Sources: Westpac-MI

13



Expectations now similar by sector

120

130

140

150

120

130

140

150indexindex

Primary Tertiary

Secondary Trade


60

70

80

90

100

60

70

80

90

100


Sources: Westpac-MI

14



Males a touch more nervous than females

120

130

140

150

160

120

130

140

150

160indexindex

Male Female


60

70

80

90

100110

60

70

80

90

100110


Sources: Westpac-MI

15



Similar with or without children

120

130

140

150

160

120

130

140

150

160indexindex

Live with children<18

Does not live with child<18

Unemployment expectations by family type LR ave = 100

60

70

80

90

100110

60

70

80

90

100110


Sources: Westpac-MI

16



Tenants are now the most nervous

120

130

140

150

160

120

130

140

150

160indexindex

Tenant

Mortgagor

Owned

Unemployment expect by household type LR ave = 100

60

70

80

90

100110

60

70

80

90

100110


Sources: Westpac-MI

17



As other cities deteriorate, Sydney improves…

120

130

140

150

160

120

130

140

150

160indexindex

Sydney

Melbourne

Remaining cities

Unemployment expectations by state LR ave = 100

60

70

80

90

100110

60

70

80

90

100110


Sources: Westpac-MI

18



…as the labour market in WA unravels.

140

160

140

160

indexindex

NSW WA

Vic Qld


60

80

100

60

80

100


Sources: Westpac-MI

19



No division between the city or country

120

130

140

150

120

130

140

150indexindex

Urban

Rural


60

70

80

90

100

60

70

80

90

100


Sources: Westpac-MI

20



Level of job worries = an ongoing easing cycle

80

100

1200

100

200

300Index invert.bps

When unemployment expectations improve, theRBA tightens monetary policy

140

160

180

-500

-400

-300

-200-100

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

annual change in RBA cash rate (lhs)

forecasts

unemployment expectations trend (rhs)Source: Westpac-MI

When unemploymentexpectation deteriorate, theRBA eases monetary policy

21



…as does the pace of change in expectations.

-48

-32

-16

00

100

200

300%yrbps

When unemployment expectationsimprove, the RBA tightens monetary policy

1632

48

64

80-500

-400

-300

-200-100

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

annual change in RBA cash rate (lhs)

forecasts

change in expectations (rhs)Source: Westpac-MI

When unemploymentexpectation deteriorate, the

RBA eases monetary policy

22



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. Westpac’sfinancial services guide can be obtained by calling 132 032, visiting www.westpac.com.au or visiting anyWestpac Branch. The information may contain material provided directly by third parties, and while suchmaterial is published with permission, Westpac accepts no responsibility for the accuracy orcompleteness of any such material. Except where contrary to law, Westpac intends by this notice toexclude liability for the information. The information is subject to change without notice and Westpac is

DisclaimerDisclaimer

later date. Westpac Banking Corporation is registered in England as a branch (branch number

BR000106) and is authorised and regulated by The Financial Services Authority. Westpac EuropeLimited is a company registered in England (number 05660023) and is authorised and regulated by TheFinancial Services Authority. If you wish to be removed from our e-mail, fax or mailing list please send ane-mail to [email protected] or fax us on +61 2 8254 6934 or write to Westpac Economics atLevel 2, 275 Kent Street, Sydney NSW 2000. Please state your full name, telephone/fax number and

company details on all correspondence. © 2011 Westpac Banking Corporation. Past performance is not areliable 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 arereasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks anduncertainties. The ultimate outcomes may differ substantially from these forecasts.

23





NSW full-time stronger than expectations

1.0

2.0-50

-40

-30

-20

-10


-2.0

-1.0

0.0010

20

30

40

50Dec-94 Dec-98 Dec-02 Dec-06 Dec-10

unemploy. exp* (lhs)


*trend represented as deviation

from 10 year average

25



NSW hours worked still quite weak

2.0

3.0

4.0

5.0

6.0-50

-40

-30

-20

-10

% yrunemploy. exp* (lhs leading 2 mths)


% invertedSources: Westpac-MI, ABS

-4.0

-3.0

-2.0

-1.0

0.01.00

10

20

30

40

50Nov-96 Nov-00 Nov-04 Nov-08 Nov-12

*trend represented as deviationfrom 10 year average

26



Vic expectations now diverging from employ

1.0

2.0-50

-40

-30

-20

-10



-2.0

-1.0

0.0010

20

30

40

50Oct-97 Oct-01 Oct-05 Oct-09

unemploy. exp* (lhs leading 2 mths)


27



Vic hours weaker than expectations

3.0

4.0

5.0

6.0-50

-40

-30

-20

-10

% yr% invertedSources: Westpac-MI, ABS


-3.0

-2.0

-1.0

0.0

1.0

.

010

20

30

40

50Nov-96 Nov-00 Nov-04 Nov-08 Nov-12



28



Qld expectations still very weak

2.0

3.0-50

-40

-30

-20

-10


-1.0

0.0

1.0010

20

30

40

50Oct-98 Oct-02 Oct-06 Oct-10


trend full-time employ (rhs)*trend represented as deviationfrom 10 year average

29



Qld expectations still very weak

4.0

6.0

8.0-50

-40

-30

-20

-10

% yr



% inverted

-4.0

-2.0

0.0

2.0010

20

30

40

50Dec-94 Dec-98 Dec-02 Dec-06 Dec-10

Sources: Westpac-MI, ABS


30



WA expectations much weaker than jobs

1.0

2.0

3.0-50

-40

-30-20

-10


-3.0

-2.0

-1.0

0.01020

30

40

50

60Jul-98 Jul-02 Jul-06 Jul-10


trend full-time employ (rhs)*trend represented as deviationfrom 10 year average

31

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expectations bulletin pack (5).pdf