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7/29/2019 Expectations Bulletin Pack (6)
1/23
ConsumerexpectationsInflation & unemploymentexpectation chart pack.
February 2013
7/29/2019 Expectations Bulletin Pack (6)
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
7/29/2019 Expectations Bulletin Pack (6)
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
7/29/2019 Expectations Bulletin Pack (6)
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
7/29/2019 Expectations Bulletin Pack (6)
5/23
Labour market concerns, the trend has peaked
80
100
120
140
160
180
200
80
100
120
140
160
180
200
Feb-88 Feb-93 Feb-98 Feb-03 Feb-08 Feb-13
indexindex
unemployment expectations
unemployment expectations trend
Sources: Westpac-MI
unemployment
expected to rise
unemployment
expected to fall
peak,
Feb 09
5
7/29/2019 Expectations Bulletin Pack (6)
6/23
but still points to a rising unemployment rate
80
100
120
140
160
180
200
-200
-100
0
100
200
300
400
Feb-88 Feb-93 Feb-98 Feb-03 Feb-08 Feb-13
indexannual change in unemployment rate smoothed (lhs)
unemployment expectations trend (rhs)
bps
Sources: Westpac-MI
unemployment
rising
unemployment
falling
6
7/29/2019 Expectations Bulletin Pack (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
Feb-95 Feb-99 Feb-03 Feb-07 Feb-11
bps ttyunemploy. expectations (lhs leading 4mths)
change in employ/pop ratio (rhs)
% long run average Sources: Westpac-MI, ABS
7
7/29/2019 Expectations Bulletin Pack (6)
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
7/29/2019 Expectations Bulletin Pack (6)
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
7/29/2019 Expectations Bulletin Pack (6)
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)
% long run average Sources: Westpac-MI, ABS
10
7/29/2019 Expectations Bulletin Pack (6)
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)
% long run average Sources: Westpac-MI, ABS
11
7/29/2019 Expectations Bulletin Pack (6)
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
Feb-00 Feb-03 Feb-06 Feb-09 Feb-12
indexindex
working
unemploy/retired/not working
Sources: Westpac-MI
Long run average = 100
12
7/29/2019 Expectations Bulletin Pack (6)
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
Feb-00 Feb-03 Feb-06 Feb-09 Feb-12
indexindex
manager/prof
labourer/operator
paraprof/trades
sales/clerical
Sources: Westpac-MI
Unemployment expectations by occupation LR ave = 100
13
7/29/2019 Expectations Bulletin Pack (6)
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
Feb-00 Feb-03 Feb-06 Feb-09 Feb-12
indexindexPrimary Tertiary
Secondary Trade
Sources: Westpac-MI
Unemployment expectations by occupation LR ave = 100
14
7/29/2019 Expectations Bulletin Pack (6)
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
Feb-00 Feb-03 Feb-06 Feb-09 Feb-12
indexindex
Male Female
Sources: Westpac-MI
Unemployment expectations by occupation LR ave = 100
15
7/29/2019 Expectations Bulletin Pack (6)
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
Feb-00 Feb-03 Feb-06 Feb-09 Feb-12
indexindex
Live with children
7/29/2019 Expectations Bulletin Pack (6)
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
Feb-00 Feb-03 Feb-06 Feb-09 Feb-12
indexindex
Tenant
Mortgagor
Owned
Sources: Westpac-MI
Unemployment expect by household type LR ave = 100
17
7/29/2019 Expectations Bulletin Pack (6)
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
Feb-00 Feb-03 Feb-06 Feb-09 Feb-12
indexindex
Sydney
Melbourne
Remaining cities
Sources: Westpac-MI
Unemployment expectations by state LR ave = 100
18
7/29/2019 Expectations Bulletin Pack (6)
19/23
Notable turnaround in mining states
60
80
100
120
140
160
60
80
100
120
140
160
Feb-00 Feb-03 Feb-06 Feb-09 Feb-12
indexindex
NSW WA
Vic Qld
Sources: Westpac-MI
Unemployment expectations by state LR ave = 100
19
7/29/2019 Expectations Bulletin Pack (6)
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
Feb-00 Feb-03 Feb-06 Feb-09 Feb-12
indexindex
Urban
Rural
Sources: Westpac-MI
Unemployment expectations by state LR ave = 100
20
7/29/2019 Expectations Bulletin Pack (6)
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
7/29/2019 Expectations Bulletin Pack (6)
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
7/29/2019 Expectations Bulletin Pack (6)
23/23
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23