Aurelia Butler

Figures from property consultant CoreLogic out on Monday showed prices in the combined capital cities nudged up 0.3% in April from March, as Sydney dropped 0.2% for a second month and Melbourne held steady. Brisbane again fared much better with a rise of 1.7%, while Perth rose 1.1% and Adelaide 1.9%.Values in the regions climbed 1.4% in April, and 24% on the year, amid a shift to country living and greater space. Combined, prices nationally rose 0.6% in April, to be up 16.7% on the year.”A rebound in migration rates as state and international borders re-opened could partially explain the renewed exuberance, along with persistently low advertised stock levels and strong economic conditions,” said CoreLogic’s research director, Tim Lawless.The market had its strongest year ever in 2021 with the notional value of Australia’s 10.8 million homes rising by A$2 trillion ($1.42 trillion) to A$9.9 trillion.The boom was a windfall for household wealth and consumer spending power, but also caused concerns about affordability that are a hot-button issue for Federal elections due on May 21.The market faces more headwinds as the Reserve Bank of Australia (RBA) is widely expected to hike interest rates for the first time in a decade, perhaps as early as its May policy meeting on Tuesday.Rates are currently at emergency lows of 0.1% but financial markets are wagering they could rise to around 2.5% by the end of the year. ($1 = 1.4130 Australian dollars) More

Activity in the sector was held up by resilience in output, overall orders and optimism about the year ahead, even as producers grew more wary of persisting price pressures, the Ukraine war, logistics logjams and the global economic outlook.The final au Jibun Bank Japan Manufacturing Purchasing Managers’ Index (PMI) fell to a seasonally adjusted 53.5 in April from the prior month’s 54.1 final.That was largely in line with a 53.4 flash reading. The 50-mark separates contraction from expansion.”Latest PMI data pointed to a sustained expansion in the Japanese manufacturing sector at the start of the second quarter,” said Usamah Bhatti, economist at S&P Global (NYSE:SPGI), which compiles the survey.”The rate of growth eased from March as firms noted softer growth in new orders and a broadly unchanged expansion in production levels.”The PMI survey showed that input prices jumped at the strongest pace since August 2008, pushing manufacturers to raise selling prices at the fastest rate in the survey history.That saw firms’ optimism about conditions for the 12 months ahead to drop to its lowest since July 2020.”Though still optimistic, Japanese goods producers were increasingly wary of the continued impact of price and supply pressures, and also the impact of the war and extended lockdowns in China,” Bhatti said. More

TOKYO (Reuters) – Japanese mother of three Maiko Takahashi was never one to pinch pennies or accept hand-me-downs for her children even though circumstances for her single-income family have always been fairly modest.But times have changed. Nowadays, she has no trouble with used clothes and her pursuit of bargains and scrimping on the most trifling costs borders on the obsessive.”I’ve started to pay close attention to tips on TV shows, like minimising the number of times you open the fridge to save electricity,” said Takahashi, whose family of five lives in suburbs north of Tokyo. “We’ve started to feel the pinch going about things the usual way so I’ve made adjustments.”Takahashi’s behaviour is mirrored by a growing number of consumers and underlines a worrying trend for Japan.After lifting two years of on-and-off coronavirus curbs in March, the government was counting on what’s known as “revenge spending”, pent-up demand triggering a splurge that boosts consumption and a moribund economy, as has been seen in the United States, China and some other major economies.But with energy, food and other living costs soaring – exacerbated in recent months by a sharp decline in the yen and the war in Ukraine – those hopes are fading fast.Facing the prospect of struggling with rising prices, Japan’s famously thrifty consumers are tightening their belts even as they sit on the remains of an estimated 50 trillion yen ($383 billion) – equivalent to 9% of the economy – in “forced savings”, as the Bank of Japan calls it, accrued during the pandemic.Some bigger companies have answered a government call to raise wages but the gains of some 2% will be swallowed up by higher prices of everything from flour, to diapers and beer, economists say. In March, electricity prices in resources-poor Japan jumped 22% from the previous year – the most in more than four decades.The government recently upgraded its assessment of the economy for the first time in four months, citing an expected recovery in spending, but added a caveat that the outlook was clouded.”The chance of a ‘revenge spending’ burst is becoming smaller than we had expected,” a government official said in unusually candid remarks, noting that prospects were especially uncertain beyond the summer.FINAL FEASTWith more than 90% of consumers saying in the latest government survey that they expected everyday goods to become more expensive over the next 12 months, economists say it is no surprise to see behaviour like Takahashi’s.In addition to accepting used uniforms for her son entering kindergarten, and venturing further in search of discounts, the stay-at-home-mum said she has switched to lower-cost private brands (PB) for mayonnaise, ketchup and other food.She’s not alone. The share of so-called PB items for mayonnaise purchases nationwide rose to 22% in March from 18% a year earlier, according to market research firm Intage Inc. Supermarket giant Aeon Co saw PB food sales jump 15% in the six months to February.The “Golden Week” holiday, which began on Friday, is the first in three years without COVID-19 restrictions, and the economy should see a dramatic improvement in spending but that is likely to be the high point for consumption this year, said Daiwa Securities senior economist Toru Suehiro. “The full-fledged impact of rising costs will emerge in the July-September quarter and later, so the Golden Week will probably be the last feast of the year,” he said.The number of holiday travellers is expected to grow about 70% from last year, but still a third short of pre-pandemic levels, according to JTB Corp, Japan’s biggest travel agency.The yen’s fall to two-decade lows would normally be a boon for in-bound travellers, but Japan, fearing COVID, has kept its borders closed to tourists. In 2019, almost 32 million foreign tourists contributed to the economy.Meanwhile, the weak yen has caused pain for many companies by increasing input costs, making them just as cautious as consumers – and reluctant to raise wages.”Prices keep rising and rising for items we can’t live without, while salaries are flat,” Takahashi said. “I’m constantly racking my brains over what I can skimp on next.”($1 = 130.6400 yen) More

(Reuters) – Australia’s “Big Four” banks are set to report a further squeeze on interest margins in their upcoming results dented by growing competition, though the prospect of a recovery aided by central banks’ rate hikes is expected to bolster their outlook.The banks have tussled with increased competition in home lending amid record low rates and borrowers changing to fixed-rate loans, while costs ramp up due to investment in digital capabilities and broader inflation.These pressures will likely be evident in quarterly results of Commonwealth Bank, and first-half reports from National Australia Bank (OTC:NABZY), Westpac, and Australia and New Zealand Banking Group this month.”We remain cautious on banks. The upcoming results are likely to show significantly weaker net interest margins and signs of rising costs,” analysts at Barrenjoey said.”But we would not be surprised if banks were more optimistic in their outlook, especially around the benefits of rising rates… This may provide them with some near-term support.” Still, earnings at top bank CBA and No. 2 lender NAB would likely have benefited from the flurry of new business they flagged in their reports in February, while No. 3 lender Westpac had also progressed with its cost cutting plan.No. 4 lender ANZ, meanwhile, had forecast a first-half hit from softer performance in its markets business. It has also steadily lost Australian home loan market share since 2019.”Lower NIM, flat mortgage book, removal of certain bank fees, weak trading income and higher expenses are not a great combination,” Barrenjoey analysts wrote of ANZ, adding that they expect a “soft” first-half result.In a prelude of things to come, mid-sized Bank of Queensland last month reported a hit to margins from stiff housing loan competition.RATES TO THE RESCUEThe Reserve Bank of Australia has all but said it would raise rates to counter super-charged inflation, while the Reserve Bank of New Zealand has hiked rates at its last four meetings to levels not seen since June 2019.This would benefit banks at a time when the Australian property market is showing some signs of cooling https://www.reuters.com/business/australia-housing-bubble-slowly-deflating-heat-leaves-sydney-melbourne-2022-03-31 after a bumper 22% surge in prices in 2021 due to record low rates and a shift to working from home during the pandemic.”With the RBA cash rate starting to move higher… investor attention is set to switch to the impact of higher rates on revenue growth and net interest margins with slowing lending growth and house prices,” analysts at Citi wrote.ANZ, in its trading update in February, had forecast rising rates in New Zealand would relieve some pressure on margins in the second quarter. More

DAKAR (Reuters) – U.N. Secretary-General Antonio Guterres on Sunday urged debt relief for African countries and more investment to help their economies recover from the COVID-19 pandemic and weather the impacts of the Ukraine war.The United Nations chief spoke in Senegal on the first leg of a trip that will also include Niger and Nigeria, where he will visit communities affected by conflict and climate change.Supply disruptions due to Russia’s invasion of Ukraine have caused simultaneous food, energy and finance crises in Africa and beyond, Guterres said. The coronavirus pandemic pushed many poor countries into debt distress and the Ukraine war has disrupted their economic recovery, according to the International Monetary Fund (IMF). Public debt ratios in sub-Saharan Africa are at their highest in more than two decades, the IMF said last week.”International financial institutions must urgently put in place debt relief measures by increasing liquidity and fiscal space, so that governments can avoid default and invest in social safety nets and sustainable development,” Guterres said.The United Nations has made proposals to the World Bank and the IMF regarding the mobilization of various funds and debt relief instruments, but so far the measures taken have been insufficient, he added.He called on wealthy countries and pharmaceutical companies to accelerate donations of COVID-19 vaccines and invest in local vaccine production, with almost 80% of the African population still not vaccinated against COVID-19.”Beyond vaccination, we see big imbalances when it comes to investments in post-COVID recovery,” he said, adding that economic growth per capita is projected to be 75% lower in Africa than in the rest of the world over the next five years.Guterres said he visited a vaccine manufacturing unit in Dakar with Senegal’s president Macky Sall which will soon be equipped to produce vaccines against COVID-19 and other diseases.An executive at South Africa’s Aspen Pharmacare (OTC:APNHY) told Reuters earlier, however, that Africa’s first COVID-19 vaccination plant, touted as a trailblazer last year, now risks shutting down after receiving not a single order. More

Haulage companies that spent last year battling to hire drivers have a new problem: a shortage of trucks.On both sides of the Atlantic, rising wages have helped lure workers back on the road after a lack of drivers strained the industry to breaking point, leaving shipping containers stranded at ports on the US west coast and petrol pumps running dry on British forecourts.But a longstanding shortfall of equipment — due originally to coronavirus restrictions and chip shortages — is becoming more severe as Russia’s invasion of Ukraine shuts down the supply of critical components and lockdowns in China threaten further turmoil in global supply chains.“The driver has been the biggest constraint of the last two years . . . The bigger supply constraint now is the truck, and to some extent the trailer,” said Tim Denoyer, analyst at Indiana-based ACT Research. Rico Luman, an economist at ING, said some European truckmakers were not taking more orders because their backlogs were already long, while others could not quote a price because they were unsure of the cost of raw materials for vehicles that might be delivered “far into” next year.“Trucks one to two years old are almost the same price as new ones at the moment: there is no option B to get spare capacity,” Luman said.“We are struggling to keep the UK fleet on the road,” said Kieran Smith, chief executive of the recruitment agency Driver Require, who said vehicle availability at the operators with which he works had dropped noticeably because of a lack of spare parts.Higher pay — wages across the industry rose about 25-30 per cent over the past year, according to Denoyer — and the easing of the Omicron coronavirus wave has alleviated worker shortages in the US. The wave of new workers, meanwhile, has helped cap costs for companies transporting their goods by truck. US dry-van spot rates, excluding fuel, fell abruptly in March and are down more than a third since the start of the year. The picture is similar in the UK, where industry associations said driver shortages had eased as pay improved, testing for HGV licences resumed and large-scale government-backed training schemes got under way.“A year ago we were bleeding drivers all over as a result of Covid,” said Rod McKenzie, head of policy at the Road Haulage Association. “Now things are really easing.” McKenzie estimated a shortfall of 100,000 drivers had dropped to about 65,000.Luis Gomez, president of XPO Logistics Europe, said vacancies in the company’s UK business had fallen and wages had stabilised across the industry, with job applicants giving priority to shift patterns that offered a better work-life balance over large pay packets.Paul Day, chief executive of Turners Soham, a Cambridgeshire-based trucking and warehousing company, said the UK market was “close to equilibrium” between the number of drivers and the amount of work, with wages in his own business up about 15-20 per cent year on year.But he and others believed the haulage industry was able to cope chiefly because rising prices for goods, combined with bottlenecks in manufacturing, have taken the edge off demand.“We’ve avoided the worst because ironically the economy slowed down,” said Day, who added that the volume of goods moved by supermarkets had tailed off, although demand in construction was still solid.

Ken Hoexter, an analyst at Bank of America, said shippers in the US were also reporting weaker demand as fuel prices soared and manufacturers had less work to do rebuilding their inventories, which dropped to low levels during the pandemic. However, the industry remains fragile. Although hauliers generally pass on changes in fuel prices, they face cost pressures for other raw materials. The price of Ad Blue, an anti-pollutant used in diesel engines, has quadrupled because its crucial ingredient is sourced from Russia, said Day. Small operators caught in drawn-out negotiations with customers could swiftly run into cash flow difficulties.Though the driver shortage is less acute, the industry has not solved endemic problems with recruitment and retention of an ageing workforce.“We’re in the slower part of [the] year . . . and we’re operating close to the edge,” Smith said, adding that conditions could worsen as demand picked up during the traditionally busier summer months. “It will be really tight . . . We’re not far away from another shortage.” More