Friday, November 30, 2012

November Cairnswatch

With the 2012 year closing fast the penultimate edition of Cairnswatch from Rick Carr at HTW was released today.

There is no significant change from recent trends  although I thought Rick made an interesting comment in the overview:
On the plus side are continuing gains in airport arrivals, building approvals and
employment. However the downside is an extremely tight rental housing market, which
if not resolved will become a constraint on future economic growth.
Most media and political comment to date has perceived tight rental markets and higher rents as a positive set to drive housing construction growth. This is not a given however and as previously noted places such as Perth have maintained much tighter rental markets for a year or two now without having induced substantial building activity or stronger property prices.

Loose Change pointed out previously that Cairns is well represented in rental suburbs and a dysfunctional rental housing market may not turn out to be all positive.  Credit data today from ABS was weak reviving speculation of further interest rate cuts.

Also noted this month in Cairnswatch was the special topic of mortgagee and receiver sales which fits quite well with much previous comment at Loose Change!

Sunday, November 25, 2012

End of the Line

The Far North has always had a reputation as an "end of the line" place which attracts those seeking to escape until they get to where the road goes no further. A curious news snippet surfaced today that Cairns police arrested a conman on Britains "Most Wanted" list following a random breath test.

Robert Taylor-Barefoot had been in Cairns more than a year and operating a business under the alias Sam Jeffers.
He had set up an advertising firm advising how to maximise marketing prospects through social media and claimed to work closely with internet giants Google and Twitter and to be a close friend of Facebook's Mark Zuckerberg.
The business website of "Sam Jeffers" still remains: SJMEDIA

Sunday, November 18, 2012

Oh dear!

Price competition is a problem??
This initiative by our government didn't make any headlines, but it will potentially hold huge benefits for the Cairns economy.
The change allows small, local businesses and contractors to compete on an even playing field for council projects.
I know so many Cairns businesses who have previously missed out on contracts because they just can't compete on price alone with big, multi-national companies. They have no(sic) a much better chance to win those contracts under these changes.
Well done to Local Government Minister Crisafulli for listening to councils and local businesses on this one.
Apparentlty price competition is something which hurts our economy? And again he is spruiking that if we all buy off each other locally we will all be fabulously wealthy? Wealth through autarky! It works for North Korea? 

Update: Info on this even via Hansard explanatory notes to the legislation is strangely scarce? 

Saturday, November 17, 2012

Observations on eclipse demographics


Sadly for the stoic souls who remained in the city the view of this weeks total eclipse was interrupted from The Esplanade by a particularly annoying cloud which stubbornly resisted advice on what it should do with itself. Subsequent attempts by KS to offload his $4 cardboard eclipse watching glasses on eBay have also been unsuccessful!

Radio advertisements today promote a bumper report on the eclipse in the Weekend Compost print edition, although there doesn't appear to be much online. As previously noted the brisk trade in town stripped supermarket shelves of some essential items such as bottled water and chips. The Telstra mobile network also slowed to a crawl Wednesday morning.

Noted also in social media and anecdotally were observations on the skewed demographics of the visitors. The legendary 'feral' community in the Far North appeared rejuvenated. A description of eclipse visitors as 'organic' appeared in a facebook forum, although it was felt that 'skanky' was a bit extreme! Use of the term 'hippy' itself now definitely betrays the old white men demographic.

KS observed that items such as the Woolies Macro organic brand shelves were also bare at  the CBD store. Organic muesli became scarce! It was an influx of a demographic which i'm not entirely sure was anticipated? Empirical research would be interesting.

Meanwhile the arrival of direct flights from China may have promoted a less relaxed demographic of stall operators at Rusty's Market this weekend. Dressed in immaculate white shirt and tie this man had printed material only in Chinese so I have no idea what he was promoting. I don't recall ever before seeing a stall at Rusty's operated by anyone wearing a tie? Mind you this was the least busy stall on the day!


Thursday, November 15, 2012

Girls go to work

The latest ABS regional employment data for Far North has continued some of the positive trends of recent months. The unemployment rate fell to 9.3% while estimated employment gained a further 1,800 jobs and the participation rate also increased.

All of the gains were in female employment which in the last 6 months has shown a big turnaround from the previously weak trend. I guess this is mostly related to tourism? The female data as usual is tagged with a sample warning from ABS.

However, the male unemployment rate remains above 10%. It should be remembered the data is not seasonally adjusted as the national data is. This weeks eclipse influx should support the current month ahead of the Christmas season. China Eastern has also reported 80% occupancy for the initial two weeks of direct flights to Cairns from Shanghai. The test is likely to be in the new year which is typically very weak in the Far North.

Monday, November 12, 2012

Eclipse of the wine cask long overdue

The Cairns Post has a report on busy weekend trading around the region ahead of the eclipse: Total eclipse of the mart in Cairns.

"BOTTLED water, bread, softdrinks and chips became hot property in Far Northern supermarkets as eclipse revellers stocked up and left shelves bare."
Even Mareeba is described as "bopping"?? Busy trade was certainly noted at city outlets particularly among a backpackerish genre possibly associated with the above shopping list? The phenomenon was also noted at liquour outlets.

However also noted was confusion as patrons with shopping trolleys filled with liquid refreshment were advised of restrictions on purchase of wine casks in the city before 4pm. The restrictions on wine casks are a measure to control alcohol abuse, although my understanding is that these only apply in the city and not the suburbs?

Apparently it is socially fine from a policy perspective to buy a cask at 10AM in the burbs and pass out at home during the day, but not to do so in the city and pass out with head rested on the silver pillow thoughtfully enclosed in the cask for such purpose!

Alcohol management plans on Cape York continue to be contentious. There was also a recent proposal by the evil retail duopoly to set a floor price on alcohol in Alice Springs, which apparently drew a query from the ACCC. However the anomalous taxation of cheap wine remains ridiculous.

Wine is taxed on price while all other liquour is taxed by the quantity of alcohol. This means cheap bulk wine is minimally taxed compared to quality wine and other alcohol. The grubby political history to buy the support of  wine grape farmers in the riverland goes all the way back to the Fraser guvmint in the 1970's.

The Henry tax review recommended reform as have almost all objective analyses. Just a few weeks ago the National Health Preventative Agency told the relevant minister:
"Based on public health considerations, the Agency finds that the current operation of the Wine Equalisation Tax is of concern and requires reappraisal."
Ignored again ..... how many times now .....  despite the push for revenue to fund a surplus? Mind you there are many economic concerns apart from health. Why is scarce irrigation water being used to produce cheap tax-advantaged alcohol consequently exacerbating a social problem?

Friday, November 9, 2012

UN Tourism Report

The previous tourism post  included a reference to a recent UN World Tourism Organisation report. This includes some interesting data and graphs such as this showing international arrivals and tourism receipts recovering from the GFC to resume trend growth.

The previous tourism post also included a chart from Macrobusiness on the tourism trade balance. This table for the top ten tourism receipt nations shows the currency impact with Australia the only one to decline in local currency despite growth is $US terms.  

When it comes to international travel Australians come in at number ten despite the tyrrany of distance and now also top the list in per capita expenditure. I have also commented previously on Chinese tourism spending perhaps reflecting an elite demographic in a large population and this table shows how low Chinese tourism spending per capita is despite coming in at number three on aggregate.

Finally, the tourism growth forcast doesn't make tourism look like such a bad place to be given the wailing and screaming we have heard in recent years that Cairns needed to diversify or perish.

Thursday, November 8, 2012

The Qld participation rate cliff?

Following the previous post on today's labour force data I updated with a link to Grogs Gamut which included commentary and graphs specific to Queensland. A quick comparison of trend participation rate for Queensland relative to Australia is interesting.

Queensland has had a higher participation rate relative to the national average however this has narrowed sharply in the last year. Regional data is out next week but again despite the poor unemployment rate FNQ has remained among the top participation rates in Qld. Again this is trend data for how many percentage points the Queensland participation rate is above the Autralian rate since 1998:

Employment v Interest Rates

The labour market has been a focus of the polarisation of opinion between those who think the RBA shoulda cut, and those who think they shouldna cut before anyway. I doubt that today's labour force data frfom ABS will resolve that difference.

The headline (seasonally adjusted) outcome was a rise in employment and a slight fall in the unemployment rate. Within that there are some weaker indicators, most particularly in aggregate hours worked. The trend rate of unemployment nudged up a notch.

Queensland continues to look relatively weak in recent months. Trend unemployment rate in Queensland also ticked up however it is the participation rate trend in Queensland that should probably be of most concern.

The trend participation rate in Queensland is the lowest since 2006 despite the unemployment diverging to the upside of the national average. During calendar 2012 the national trend participation rate has nudged down by 0.2% while Queensland trend has fallen by 0.9%, although it still remains above the national rate.

Some of the more interesting wonky data and comments on the labour market and interest rates in the last week have been at Ricardian Ambivalence. As usual Mark the Graph is quick off the mark with  an excellent range of charts including comparison of the state trend unemployment rates:

Earlier today New Zealand released some quite weak labour market stats. I recall recent reports of stronger inward migration across the ditch in the last year so that could also be a trend to watch.

Update: As soon as I posted that Grogs Gamut also has just posted some commentary and lots of graphs including a particular focus on the recent weakness in Queensland. 

Tourism comings and goings

Conus Consulting blog has a summary of this weeks arrivals and departures data with both showing gains and particularly arrivals from China.

Macrobusiness also posted with extensive graphs and commentary: Green shoots for Australian tourism?

This also includes an interesting comment and graph on the tourism trade balance:
Finally, the slight recent improvement in tourism numbers was also reflected in trade data released on Monday by the ABS, which revealed a third consecutive monthly increase in Australia’s tourism-related trade surplus to $193 million in September:

Also this week was noted a post at The Economist: The world still travels
INTERNATIONAL tourists are proving notably resilient to the storms buffeting the world's economies. According to the UN World Tourism Organisation's Tourism Highlights, last year there were 983m international arrivals, a 4.6% increase on 2010. And 2012 has started even better, so expectations now are for over one billion arrivals by the year end.

Tuesday, November 6, 2012

Giddy up!

Apparently there is a horse race of some significance this week. Funnily enough recent days have seen announcements, or rather re-announcements, of state guvmint funding for country horse racing.

Within the current budgetary austerity somehow horse racing became a priority and what better time to promote that than cup week. The Member of Cairns was proudly re-announcing the contribution for Cannon Park:
Mr Dickson said the $1.96 million dollar project would see the existing turf track completely rebuilt, the installation of a grassed access track suitable for ambulances and a much-needed renovation of the current stable facilities.

“The Newman Government is continuing to deliver on its pledge to rejuvenate the Queensland racing industry and projects like this are just one of the many ways we are rebuilding racing across the state,” Mr Dickson said.

“I am determined to create a sustainable future for Queensland racing, and this regionally focused funding forms a big part of that commitment. “This upgrade will provide a much needed boost to Cairns racing, allowing the club to attract stronger race fields and entice more patrons to the track.”
Not to be outdone as the field approached the starting gates at Flemington the Premier was twittering away on a new race meeting in addition to their current cup day event at Kumbia (population 191)!

Premier Campbell Newman and Racing Minister Steve Dickson today announced Kumbia Race Club (KRC) would receive a second race meeting next year as part of the Sustain Country Series.
Mr Newman said the additional meeting on June 1 was part of his Government’s commitment to rejuvenating country clubs, racing and their communities.

“Country racing is the heart and soul of the industry and we are taking the steps needed to protect and reinvigorate these regional clubs.”
While the amounts are admittedly small I cant help but feel 'picking winners' in what remains a declining industry despite some high profile events, such as Cairns amateurs, is misguided. Never mind, the contract for Cannon Park has been awarded to a local company which is apparently always good irrespective of the price!

Sunday, November 4, 2012

War on Sugar

Loose Change posted previously on the Sugar Challenge from prominent economist Rory Robertson (currently in the employ of Westpac I believe) where he challenged research on sugar and obesity. Aussie Macro Moments continues to update the progress of Rory's war on the Far Norths most important agricultural commodity.

The latest salvo was delivered in Canberra at a discussion on the place of sugar in Australia's dietary intake.
The clear need for a tougher stance against added and concentrated sugar is where the evidence leads - and that, by the way, also is the Australian Government's current position in the draft guidelines - even if the University of Sydney and others with strong links to the sugar and sugary-food industries (Slides 11 and 12) have been busy misrepresenting the basic facts of this matter.
Rory has also published a quick tour of his credibility in earlier public debates. However, I hadn't previously been aware that Rory is a product of Cape York from Strathburn Station.

The War on Sugar may be having some impact as the sugar price has been weaker since Rory opened fire:


Friday, November 2, 2012

Eclipse euphoria!

Cairns and Port Douglas are now in countdown for the forthcoming total eclipse of the sun. As previously speculated there is growing speculation on whether (to quote Oscar Wilde), and the probability of whether the sunrise event will coincide with a clear horizon! Were KS an eclipse gambler he would not be placing his chips on this one!!

However when it come to astronomical events KS is a cynic who still remains deeply disappointed with God for delivering during his lifetime the most dismal visitation of Halleys Comet of all time! Sorry God but you deserve crap on that one mate!

Never mind the astronomical event but rather the reported economics: Eclipse to inject $75 million into Far Northern economy

The King Parrot hit the analogy hard:  "A huge shot in the arm for the Cairns & FNQ economy". Perhaps a shot in the butt may have been more appropriate?

Ah Cairns, the junkie economy apparently?  Mind you we are far from alone when it comes to that! Why has economics become so closely aligned with drug metaphors of stimulants and injections?

Injections, multipliers and clocks rule! Yet again a primary source would be nice but remains elusive and while I suspect methodology has advanced since the worst political excesses of the Kennett years on this event economics stuff .... who knows?

Obviously an eclipse event would 'inject' less in peak season (when visitors will simply be displaced rather than additional) than it would in the middle of November. The timing of this event is fortuitous in that regard. Whether this is factored into these reports is unknown and unreported?

Open information is not that difficult really?

P.S. KS is just disappointed that he cant find a market in eclipse visibility futures!

Thursday, November 1, 2012

CairnsWatch in the data mix

Recent days have thrown some interesting data into the mixer and revived debate twixt those who think interest rates must be cut and them who think they shouldn't have already been cut. Building approvals from ABS generated positive comment:

Conus Consulting: Good news on building approvals
Queensland Economy Watch: Building industry recovery looks more likely 

Credit data from the RBA was less positive with an alternative perspective from The Kouk. Tracking the alternative perspectives on residential property in Australia is quite easy. If you want the negative perspective you go to Macrobusiness. If you want the positive perspective you go to Christopher Joye. If you are undecided you just open a bottle of Shiraz and enjoy the debate!

Rick Carr has also released his CairnsWatch report to provide perspective of Cairns position. Yet again when it comes to property the story is low and declining vacancy rates. However, as with so many trends, Cairns is not unique. Low vacancy rates have become a feature more widely without yet triggering booming property activity eg: Perth with a vacancy rate below 1%.

Rick did refer to this in his recent Cairns Chamber presentation in the context that we shouldn't expect investors to flood into Cairns property because of low vacancy rates because there are many other attractive markets with similarly low vacancy rates. The comments on rents are also interesting:
"Between September 2011 and September 2012, the weighted average median rent increased from $325 to $350 per week for houses, and from $240 to $255 per week for
units. Rents are likely to continue increasing during 2012-13 as the rental supply stays
They are quite substantial increases of 7.7% and 6.3% respectively for the year given the high unemployment rate and languid economy. As posted previously Cairns is well represented with two of the top fifty rental suburbs in Australia according to RP Data.

Beyond residential property the continuing trend and strong season in domestic terminal traffic is also noted in CairnsWatch.