Australians refuse to part with cash
Employment in Australia is holding steady and wages are rising. Australians, however, are choosing to hang on to their hard-earned cash. Consumer spending has slowed during the past few months owing to warmer weather and the negative response to the Federal budget.
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Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
Published on 08 Jul 14
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Employment in Australia is holding steady and wages are rising. Australians, however, are choosing to hang on to their hard-earned cash. Consumer spending has slowed during the past few months owing to warmer weather and the negative response to the Federal budget.
Sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
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Venezuela tension heats up
Duration 03:16
-
Aussie dollar surprises market
Duration 03:10
-
Markets climb as investors watch US healthcare bill
Duration 02:31
Australian net exports have also begun to slow. Recent net export growth was not as strong as the previous quarter. Part of this is due to weaker iron ore prices, which now appear to have stabilised at above $90.
Exports and consumer spending have been the main drivers of Australian growth. With both slowing down, we are anticipating lower economic growth in Australia for the second quarter.
To understand the Australian export story a little better, we also need to look at Japan. Japan experienced a period of rapid growth early in the year. This was in the lead up to the introduction of a consumption tax. Growth slowed dramatically after it was introduced in April. The sharp drop off in growth would have affected demand for Australian exports as Japan is our second largest trading partner.
The recent economic numbers out of Japan suggest the slowdown has not been as deep as some feared, and the recovery should happen quicker than expected. This is good news for Australia going forward.
In what is more good news for Australia - Chinese PMI numbers show that growth is accelerating again. The big risk to China’s recovery is the property market. However, the loosening of monetary policy and the mini-stimulus packages seem to be boosting growth for the moment.
US consumers seem to be in a similar headspace to Australians, with consumer spending and retail growth remaining subdued despite strong employment growth and some wage growth. In response, the US savings ratio is picking up.
The muted consumer in the US is perhaps not surprising given it is an election year which could cause some uncertainty.
The weaker US consumer aside, the US equity market has been rallying led by the Technology sector, with the NASDAQ recovering nicely from a 10% sell off that started in February last year.
The global rally assisted the Australian equity market recently, which has rebounded and held after end of financial year selling.