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ANZ RESEARCH

AUSTRALIAN ECONOMICS AUSTRALIAN ECONOMICS WEEKLY


17 MAY 2013 INSIDE
Economic Update Week Ahead In Focus Data Calendar Forecasts 1 2 3 7 11

FISCAL POLICY UNLIKELY TO WEIGH ON NEAR-TERM ECONOMIC GROWTH; A SUSTAINED DECLINE IN AUD WOULD SUPPORT ECONOMYS TRANSITION There were three key developments over the past week in Australia. Most importantly, the AUD continued its sharp fall, trading close to USD0.9750 at the time of writing, marking the second consecutive weekly decline of around USD0.03. The April NAB business survey revealed continuing weak business conditions across many parts of Australia, with the employment component of the survey remaining disappointing and suggestive of further unemployment rate rises. Meanwhile the Australian Treasurer confirmed that the Budget position was significantly worse than expected, mainly driven by $63bn of revenue write-downs over the coming four years. The Government has outlined a pathway back to surplus over the next 3-4 years, with most of this improvement back-loaded into the third and fourth budget years. With the Government making no significant net imposts on the economy in the 2013-14 fiscal year, the Budget will not be especially relevant to the RBAs thinking over coming months, which will more be driven by the data and whether they show sufficient momentum being achieved in the non-mining parts of the economy to offset the forthcoming slowing in mining investment over 2014 and 2015. News flow during the week continued the trend whereby uncommitted mining projects are being cancelled or indefinitely delayed. The AUD has now fallen five and a half cents in the past two weeks. There have been widespread reports of hedge funds shorting the currency. ANZ has been expecting the currency to remain reasonably supported this year, before weakening over 2014 and 2015 back towards our fair value estimates of USD0.90-0.95, driven by the reduced investment flows associated with the financing of the mining investment boom. Its possible the markets are moving ahead of this development but to be fair other fundamentals have also become somewhat less supportive of the AUD in coming weeks with global diversification flows losing some vigour, commodity prices generally softening (perhaps as investors worry less about inflation concerns) and Australian interest rate differentials have narrowed further to the rest of the world. A lower AUD if sustained would be a helpful factor in facilitating the transition from mining investment-led growth. CHART OF THE WEEK: NAB BUSINESS CONDITIONS MINING V WEAK SECTORS
70 60

CONTACT
research@anz.com Editor: Ivan Colhoun Chief Economist (Australia) +61 2 9227 1780 Ivan.Colhoun@anz.com

Index (3mma - weighted by GDP share)

50 40 30 20 10 0 -10 -20 -30 -40 98 99 00 01


Mining

Business conditions long run average * Includes manufacturing, retail, construction and wholesale 02 03 04 05 06 07 08 09 10 11 12 13

Weak sectors*

All industries

Sources: ANZ, NAB

Australian Economics Weekly / 17 May 2013 / 2 of 14

IN FOCUS

Our In Focus article this week previews the important CAPEX data release, to be published on Thursday 30th May, ahead of the RBAs June Board meeting. ANZ expects the release to reveal significantly weaker mining investment intentions (we interpret the previous expectations for mining CAPEX as errant). We would also be very surprised if non-mining investment CAPEX intentions showed any significant recovery, given the low level of capacity utilisation across the economy and the rising vacancy rate for office space. As such, we continue to see a further cut in cash rates as likely this year (most probably not until after the election), with downside risk remaining to cash rates in 2014. In Australia, the Minutes from the RBAs May Board meeting will be of interest. However, since the meeting we have received the RBAs Statement on Monetary Policy which suggested to us that the 25bp rate cut might be best described as fine tuning rather than a significant change of view by the Bank on the economic outlook. We do not expect the Minutes to provide much further colour on the recent policy decision. Only second-tier Australian economic data are scheduled for release next week. However, we will look at consumer confidence for May to determine whether Q1 retail consumption strength is likely to have continued into Q2, as some anecdotes have suggested. The latest reading will reflect the Federal Budget, the recent moderate decline in the AUD and an interest rate cut. DEEWR internet job vacancies data are also released. While we have received April reads for other job ads measures (ANZ & SEEK job ads) which have shown signs of softening, DEEWRs series provides a good industry level break down. The Tasmanian State budget is tabled on Thursday. In New Zealand, we expect April trade data to print a little stronger than the market expects and for the trade balance to improve modestly to NZD400m. In China, the HSBC flash manufacturing PMI for May will be the key focus and is published on Thursday. After printing below expectations in April, the market is expecting the series to have consolidated at current levels in May. The Bank of Japan meets next week but is not expected to change its monetary policy stance or commentary. Japanese trade data for April are also released. In Europe, the key data will be the advanced May PMIs for the euro zone. We and the market expect these data to be little changed from Aprils reads, suggesting that activity remains soft in the region. Recently, there has been concern that the weakness in the euro zone is beginning to spread to the core member economies. In view of this, the German IFO for May (on Friday) will be watched closely. European Central Bank President Mario Draghi is scheduled to speak on the future of Europe in the global economy and any comments on the euro will be of particular interest. For the UK, commentary around the Bank of Englands May monetary policy meeting will be provided in next weeks Minutes. A few members, including the Governor, voted for further quantitative easing. UK GDP data for Q1 are also released (on Thursday). In the US, Federal Reserve Chairman Ben Bernanke will deliver his semi-annual testimony on Wednesday. In previous testimonies Bernanke has stressed the slow pace of the recovery and a labour market that is far from normal. We do not believe the tone of this testimony will be altered significantly. Given the risks from the large fiscal drag on the US economy, we expect Bernanke and the Fed will remain cautious in any tapering of the current USD85bn per month asset purchase program. The Minutes from the FOMCs May meeting will likely also reflect this. In terms of economic data, we will be looking at the Kansas City Fed manufacturing activity survey for May, which we expect will be a little softer, like other May regional PMI indices to date. There is a public holiday in Canada on Monday and Bank of Canada Governor Mark Carney will speak.

THE WEEK AHEAD

Australian Economics Weekly / 17 May 2013 / 3 of 14

IN FOCUS

Dylan Eades Economist +61 2 9227 1646 Dylan.Eades@anz.com

Q1 Private capital expenditure (CAPEX) survey preview The CAPEX survey released on 30th May will include firms second estimate of their investment intentions for 2013-14 and their sixth estimate for 2012-13. Firms first estimate of their investment intentions for 2013-14 was more positive than we expected but this largely reflected a surprise increase in mining firms CAPEX outlook. This was at odds with the fact that a large number of resources projects have been cancelled or deferred and the shift in resource companies focus towards controlling costs rather than pursuing expansion. Furthermore, there has been a clear shift in the funding environment, with a number of projects finding greater difficulty in obtaining finance. As a result, we expect that mining firms second estimate of their investment intentions for 2013-14 will be downgraded (quite likely substantially). With the peak in mining investment approaching the RBA is cognisant that non-mining investment has to pick up. In the near-term, non-mining investment is however likely to remain soft at best according to business surveys and nonresidential building approvals. The Q4 2012 CAPEX survey pointed to some upturn in non-mining investment in 2013-14 but the degree of this is highly uncertain. For this reason, the second estimate of non-mining firms investment intentions will be keenly watched. With low levels of capacity utilisation, a significant strengthening would be a surprise The CAPEX survey also reports actual investment for Q1 2013. We expect restrained growth in real investment in Q1 as mining investment approached its peak and non-mining investment remained sluggish. Monthly capital imports data also point to weakness in machinery and equipment capital expenditure, although some bounce back was experienced for capital imports in April.

WHAT TO LOOK FOR: KEY NUMBERS As background, firms provide seven successive estimates for their expected investment. The Private New Capital Expenditure and Expected Expenditure (CAPEX) release on 30th May includes firms sixth estimate for 2012-13 investment intentions and their second estimate for intended capital spending for 2013-14. There is always uncertainty around these estimates and realised investment and for this reason, firms raw investment intentions must be adjusted for historical biases (using socalled realisation ratios). This is a highly subjective process and the figures below need to be interpreted in broad terms. Broadly speaking, a raw aggregate nominal investment intention for 2013-14 of around AUD145bn would imply actual investment of around AUD160bn, after accounting for historical realisation bias. This would represent no growth relative to expected investment for 2012-13 (Figure 1). (This uses 2011-12 realisation ratios.) Such an outcome would be broadly in line with our current forecasts and would support the view that monetary policy could still afford to be eased a little more. A raw aggregate investment intention of around AUD130bn for 2013-14 would imply a decline in actual nominal investment of around 10% y/y. This would be a sharper fall than currently expected by the RBA. In contrast, a raw aggregate investment intention of around AUD160bn for 2013-14 would imply growth of around 10% y/y compared with 2012-13. This would be a stronger result than both we and the RBA currently forecast and would support the view that there is less scope for further RBA policy easing. Given the weaker profile for mining investment, however, the likelihood of this scenario eventuating appears unlikely.

Australian Economics Weekly / 17 May 2013 / 4 of 14

IN FOCUS

FIGURE 1: SECOND ESTIMATE OF INTENDED 2013-14 TOTAL CAPEX SCENARIOS*


200 180 160 140 120 AUDbn 100 80 60 40 20 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Capital expenditure

High

Mid Low

* Expectations adjusted using 2011/12 realisation ratio; 2012/13 figure is an estimate

Sources: ABS, ANZ

A raw mining CAPEX intention of around AUD100bn or above for 2013-14 would be higher than we expect and would imply growth of around 5% y/y on 2012-13 expected capital expenditure (Figure 2). An estimate of around AUD90bn would be broadly in line with our expectations, suggesting a decline in mining investment of around 5% y/y in 2013-14. A raw estimate of AUD80bn or below would imply that mining investment would fall at least 15% y/y in 2013-14, suggesting that investment in this sector would be a much bigger drag on growth over 2013-14 than we are currently forecasting. We remain of the view that resources and related investment will decline more sharply in the second half of 2014 and over 2015 as investment in the LNG sector wanes.

FIGURE 2: SECOND ESTIMATE OF INTENDED 2013-14 MINING CAPEX SCENARIOS


120

Capital expenditure
100

Expectations

High

Mid
80 AUDbn

Low

60

40

20

0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

* Expectations adjusted using 2011-12 realisation ratio; 2012-13 figure is an estimate

Sources: ABS, ANZ

Expectations

Australian Economics Weekly / 17 May 2013 / 5 of 14

IN FOCUS

Despite past interest rate cuts by the RBA there is little evidence of the beginnings of a significant upswing in non-mining investment, with the high Australian dollar, weak business confidence and substantial spare production capacity weighing on non-mining investment intentions. As mentioned above, the Q4 2012 CAPEX survey suggested at least a modest rise in non-mining investment intentions for 2013-14. As always, however, these figures (and especially the first reading) need to be interpreted with care as they are often revised significantly and are dependent on the realisation ratios that are applied. Furthermore, other indicators of non-mining investment point to ongoing weakness in at least the near-term. Year-ahead CAPEX expectations as reported in the quarterly NAB business survey improved modestly in Q1 but remained at a low level. Low levels of capacity utilisation are also consistent with a subdued investment outlook this year as businesses have scope to use existing assets more intensively. FIGURE 3: PRIVATE NON-RESIDENTIAL BUILDING APPROVALS V CAPACITY UTILISATION

Sources: ABS, NAB

A raw non-mining investment intention of around AUD55bn for 2013-14 would be in line with our current forecasts and would imply growth of around 5% y/y (Figure 4). An estimate of around AUD60bn or above would be significantly stronger than our forecasts, suggesting a rise in non-mining investment of at least 15% y/y in 2013-14. Meanwhile, an estimate of AUD50bn or below would be weaker than our current forecasts and imply a decline of around 5% in 2013-14.

Australian Economics Weekly / 17 May 2013 / 6 of 14

IN FOCUS

FIGURE 4: SECOND ESTIMATE OF 2013-14 INTENDED NON-MINING CAPEX SCENARIOS


90 80 70 60 AUDbn 50 40 30 20 10 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Capital expenditure High Mid Low

* Expectations adjusted using 2011-12 realisation ratio; 2012-13 figure is an estimate

Sources: ABS, ANZ

Finally, looking at the 2012-13 outlook, a raw sixth estimate for total CAPEX intentions of around AUD165bn would imply growth of around 5% y/y (using a 1-year realisation ratio). This would be in line with the fifth estimate. A stronger/weaker number would imply an upgrade/downgrade to firms' investment intentions.

Expectations

Australian Economics Weekly / 17 May 2013 / 7 of 14

DATA & EVENT CALENDAR


WEEK STARTING 20 MAY
DATE Monday 20-May C OUNTRY NZ JN US CA Tuesday 21-May NZ DATA/EVENT Performance Services Index Nationwide Department Sales y/y C hicago Fed National Activity Index Public Holiday: Victoria day Net Migration sa C redit C ard Spending y/y C redit C ard Spending sa m/m RBNZ 2yr Inflation Expectation AU GE UK RBA Board May Meeting Minutes Producer Prices m/m Producer Prices y/y C ore C PI y/y C PI m/m C PI y/y ONS House Price y/y PPI Input nsa m/m PPI Input nsa y/y US CA FI Wednesday 22-May JN AU Fed's Dudley (Voter) Speaks in New York BoC Governor Carney Speaks ECB's Liikanen Speaks in Helsinki Westpac C onsumer C onfidence Index Westpac C onsumer C onfidence sa m/m DEEWR Internet Skilled Vacancies m/m BoJ Target Rate Merchandise Trade Balance Total Merchandise Trade Exports y/y Merchandise Trade Imports y/y EU UK EC B Euro zone C urrent Account sa Bank of England Minutes PSNB ex Interventions Public Finances (PSNC R) Public Sector Net Borrowing C BI Trends Selling Prices C BI Trends Total Orders US MBA Mortgage Applications Existing Home Sales Existing Home Sales m/m Apr Apr Apr May May 17-May Apr Apr 9.0b ----18.0 -5.0m 1.4% --------15.1b 31.3b 16.7b 8.0 -25.0 -7.3% 4.9m -0.6% May May Apr 1-May Apr Apr Apr Mar --669.0b 5.0 7.7 --------------364.0b 1.1 5.6 16.3b 104.9 -5.1% 0.1% Apr Apr Apr Apr Apr Mar Apr Apr -0.3% 0.0% 2.2% 0.5% 2.7% --1.0% 0.8% ---------0.2% 0.4% 2.4% 0.3% 2.8% 1.9% -0.1% 0.4% Apr Apr Apr Q2 ----800 2.9% 0.0% 2.2% 1,220 3.6% -0.3% 2.2% PERIOD Apr Apr Apr MARKET ---ANZ 55.0 --LAST 55.4 3.9% -0.2 GMT 22:30 05:30 12:30 17:00 -22:45 03:00 03:00 03:00 01:30 06:00 06:00 08:30 08:30 08:30 08:30 08:30 08:30 15:30 17:00 16:30 07:25 00:30 00:30 01:00 14:00 23:50 23:50 23:50 08:00 16:30 08:30 08:30 08:30 08:30 10:00 10:00 11:00 14:00 14:00 14:00 18:00 -------0.7% 0.8% 2.2% 50.4 46.9 46.7 47.0 12:30 12:30 01:00 -May May A May A May A 50.4 -47.0 47.2 01:45 07:00 08:00 08:00 08:00 11:05 12:50 May A May A May A Q1 P Q1 P Q1 P -22.0 48.4 49.9 -1.0% 0.3% 0.6% -------22.3 48.1 49.6 -1.6% 0.3% 0.6% 14:00 19:30 07:30 07:30 08:30 08:30 08:30 0.2% 0.2% -AEST 08:30 15:30 22:30 03:00 -08:45 13:00 13:00 13:00 11:30 16:00 16:00 18:30 18:30 18:30 18:30 18:30 18:30 01:30 03:00 02:30 17:25 10:30 10:30 11:00 00:00 09:50 09:50 09:50 18:00 02:30 18:30 18:30 18:30 18:30 20:00 20:00 21:00 00:00 00:00 00:00 04:00 22:30 22:30 11:00 -11:45 17:00 18:00 18:00 18:00 21:05 22:50 00:00 05:30 17:30 17:30 18:30 18:30 18:30

Fed's Evans (Voter) Speaks on Economy in Chicago

Fed's Bullard (Voter) Speaks on Monetary Policy in Frankfurt

ECB's Praet Speaks on Monetary Policy in Washington

Fed's Bernanke Testifies on Economic Outlook Fed Releases Minutes from Apr 30 - May 1 FOMC Meeting CA Thursday 23-May CH EU AU Retail Sales Less Autos m/m Retail Sales m/m C onsumer Inflation Expectation Tasmanian State Budget HSBC Flash Manufacturing PMI ECB's Noyer Speaks in Paris PMI C omposite PMI Manufacturing PMI Services ECB's Liikanen Speaks in Copenhagen ECB's Coeure Speaks in Copenhagen Euro zone C onsumer C onfidence ECB's Draghi Speaks in London GE UK PMI Manufacturing PMI Services Exports GDP q/q GDP y/y Mar Mar May

Australian Economics Weekly / 17 May 2013 / 8 of 14

DATA & EVENT CALENDAR


DATE Thursday 23-May continued C OUNTRY US DATA/EVENT Revisions: New Home Sales Fed's Bullard (Voter) to Speak on Monetary Policy in London C ontinuing C laims Initial Jobless C laims Markit US PMI Preliminary House Price Index m/m House Price Purchase Index q/q New Home Sales New Home Sales m/m Kansas City Fed Manufacturing Activity US Treasury Auctions 10-year TIPS AS Friday 24-May JN EU NZ ECB's Nowotny at Austrian central bank press conference Exports Imports Trade Balance Apr Apr Apr 4.1b 3.5b 515m 4.4b 4.0b 400m 4.4b 3.7b 718m 11-May 18-May May Mar Q1 Apr Apr May -346k 52.5 0.8% -425k 1.9% ---------3,009k 360k -0.7% 1.4% 417k 1.5% -5.0 PERIOD MARKET ANZ LAST GMT 00:00 10:05 12:30 12:30 12:58 13:00 13:00 14:00 14:00 15:00 -09:15 22:45 22:45 22:45 02:55 -10:00 12:30 15:45 ----------1.4% 0.1% 104.4 107.2 101.6 0.9% 0.5% -5.8% -1.5% 06:00 06:00 08:00 08:00 08:00 12:30 12:30 12:30 12:30 11:30 08:00 AEST 10:00 20:05 22:30 22:30 22:58 23:00 23:00 00:00 00:00 01:00 -19:15 08:45 08:45 08:45 12:55 -20:00 22:30 01:45 16:00 16:00 18:00 18:00 18:00 22:30 22:30 22:30 22:30 21:30 18:00

BoJ Governor Kuroda speech at Nikkei Conference EU's Rehn, Constancio & Barnier Speak at Brussels Fin. Reg Event ECB's Weidmann Speaks in Paris ECB's Constancio Speaks on Financial Regulation in Brussels EU's Rehn Speaks on Financial Regulation in Brussels

GE

GDP nsa y/y GDP sa q/q IFO - Business C limate IFO - C urrent Assessment IFO - Expectations

Q1 F Q1 F May May May Apr Apr Apr Apr

-0.1% 104.5 107.2 101.6 0.7% -1.7% 0.5%

US

C ap Goods Orders Non-defense ex-air C ap Goods Shipments Non-defense ex-air Durable Goods Orders Durables Ex Transportation

FI PO

Bank of Finland Debate Between King, Katainen in Helsinki Bank of Portugal's Costa at Conference on Institutional Reform

Australian Economics Weekly / 17 May 2013 / 9 of 14

FIVE WEEKS AT A GLANCE


MONDAY 20 MAY Public holiday (CA) TA: Current account (Q1) PH: Balance of payments (Apr) HK: Unemployment (Apr) TH: GDP (Q1) US: Chicago fed index (Apr), Feds Evans speak TUESDAY 21 MAY NZ: Net migration (Apr), RBNZ 2-year inflation expectation (Q2) AU: RBA Minutes HK: CPI (Apr) GE: PPI (Apr) UK: PPI (Apr), CPI (Apr) US: Feds Bullard & Dudley speak CA: BoCs Carney speaks WEDNESDAY 22 MAY AU: Westpac consumer conf. (May) TA: Unemployment rate (Apr) MA: CPI (Apr) JN: Trade (Apr), BoJ policy meeting UK: BoE Minutes EU: Current account (May) US: Existing home sales (Apr), FOMC Minutes, Bernanke testifies to parliament CA: Retail sales (Mar) THURSDAY 23 MAY AU: TAS state budget CH: HSBC flash manuf. PMI (May) TA: Ind. Prod (Apr) SI: Ind. Prod (Apr), CPI (Apr) GE: PMIs (May A) UK: Retail sales (Apr), GDP (Q1 P) EU: PMI (May A), Consumer conf. (May A), OECD Economic Outlook US: House prices (Mar), New home sales (Apr), Kansas City Fed manuf. Survey (May), Feds Bullard speaks 30 MAY NZ: Building permits (Apr) AU: Building approvals (Apr), CAPEX (Q1) SK: Business survey (Jun), Ind. prod. (Apr) HK: Retail sales (Apr) UK: Consumer confidence (May) EU: Confidence measures (May) US: GDP (Q1 S), Pending home sales (Apr) CA: Current account (Q1) FRIDAY 24 MAY NZ: Trade (Apr), VN: CPI (May) PH: Trade (Mar) TA: GDP (Q1 F) GE: GDP (Q1 F), IFO (May) US: Durable & capital goods orders (Apr)

27 MAY Public holiday (UK, US) GE: Retail sales (Apr) CH: Ind. profits (Apr) HK: Trade (Apr)

28 MAY US: S&P/CaseShiller home prices (Mar, Q1), Richmond Fed manuf. (May), Dallas Fed manuf. (May), Consumer confidence (May)

29 MAY AU: Const. work done (Q1) SK: Current account (Apr) JN: Retail sales (Apr) TH: Policy meeting BR: Inflation (May), GDP (Q1), Policy meeting GE: CPI (May), Unemployment (May) CA: Policy meeting

3 JUNE Public holiday (NZ) AU: Retail sales (Apr), Company profits (Q1), Inventories (Q1) CH: Non-manuf. PMI (May) & HSBC manuf. PMI JN: Capital spending (Q1) TH: CPI (May) SK: CPI (May SI: PMI (May) ID: Inflation (May), Trade (Apr) GE: PMIs (May F) UK: PMI manuf. (May) EU: PMI manuf. (May F) US: Construction spending (Apr), ISM manuf. (May) 10 JUNE Public holiday (AU, CH) NZ: Manuf. Activity (Q1), QV house prices (May) CH: Loans & money supply (May) JN: GDP (Q1 F), Trade (Apr)

4 JUNE AU: ACT & Qld state budget, Current account (Q1), Net exports (Q1), RBA policy meeting UK: PMI construction (May) EU: PPI (Apr) US: Trade (Apr), ISM new york (May)

5 JUNE NZ: Construction work done (Q1), ANZ commodity prices (May) AU: GDP (Q1) CH: HSBC services PMI (May) TA: CPI (May), WPI (May) PH: CPI (May) UK: PMI services (May) EU: PMI ser. (May F), GDP (Q1 P), Retail sales (Apr) US: ADP employment (May), ISM non-manuf. (May), Feds Beige Book, Feds Fisher speaks CA: Building permits (Apr) 12 JUNE Public holiday (CH) NZ: Card spending (May) AU: Westpac consumer conf. (Jun) JN: CGPI (May) SK: Unemployment (May) IN: CPI (May) UK: Jobless claims (May), ILO unemployment (Apr) GE: CPI (May F) EU: Ind. prod. (Apr)

6 JUNE AU: SA state budget, Trade (Apr) GE: Factory orders (Apr) UK: BoE policy meeting EU: ECB policy meeting US: Flow of funds, Feds Plosser speaks CA: PMIs (May)

31 MAY NZ: ToT (Q1), ANZ activity outlook (May) AU: Private sector credit (Apr) JN: CPI (May), Unemployment (Apr), Ind. prod. (Apr) TH: Current Account (Apr) IN: GDP (Q1) EU: CPI (May), Unemployment (Apr) US: Personal income & spending (Apr), PCE (Apr), Chicago PMI (May), Univ. of Michigan (May) CA: GDP (Mar, Qq) 1 JUNE CH: Manuf. PMI (May) 2 JUNE US: Bernanke speaks 7 JUNE SK: GDP (Q1 F) TA: Trade (May) MA: Trade (Apr) GE: Current account (Apr), Ind. Prod. (Apr) UK: Trade (Apr) US: Non-farm payrolls (May) CA: Unemployment (May) 8 JUNE CH: Trade (May) 9 JUNE CH: CPI (May), Ind. Prod (May), PPI (May), Retail sales (May)

11 JUNE Public holiday (CH) NZ: ANZ truckometer (May) AU: Housing finance (Apr), NAB business survey (May) MA: Ind. Prod. (Apr) JN: BoJ policy meeting UK: Ind. prod. (Apr) US: NFIB (May), JOLTS (Apr)

13 JUNE NZ: RBNZ policy meeting AU: Labour force (May) SK: BoK Meeting ID: BI policy meeting US: Retail sales (May), PPI (May)

14 JUNE NZ: Food prices (May) HK: Ind. Prod (Q1), PPI (Q1) SI: Unemployment (Q1 f), Retail sales (Apr) EU: CPI (May) US: Univ. of Michigan conf. (Jun P), Ind. prod. (May)

17 JUNE NZ: Performance services index (May), Westpac consumer confidence (Q2) SI: Trade (May) IN: Policy meeting SK: PPI (CH) EU: Trade (Apr), Employment (Q1) US: Empire manuf. Survey (Jun), TIC flows (Apr), NAHB housing market index (Jun)

18 JUNE AU: NSW state budget, RBA Minutes JN: Ind. Prod. (Apr F) CH: Property prices (May) UK: PPI (May), CPI (May), ONS house prices (Apr) EU: ZEW survey (Jun) US: CPI (May), Housing starts & building permits (May)

19 JUNE NZ: Current account (Q1) JN: Trade (May) MA: CPI (May) PH: BoP (May) UK: BoE Minutes EU: Construction output (Apr) US: FOMC meeting CA: Wholesale sales (Apr)

20 JUNE NZ: GDP (Q1) AU: FX transactions , RBA Bulletin (Jun qtr) CH: HSBC flash manuf. PMI (Jun) TA: Policy meeting (May) GE: PPI (May), PMIs (Jun A) EU: Consumer confidence (Jun A) US: Markit PMI (Jun P), Philly Fed survey (Jun), Existing home sales (May)

21 JUNE NZ: ANZ job ads (May), ANZ consumer confidence (Jun) BZ: Foreign investment (May) EU: Current account (Apr) CA: CPI (May)

Australian Economics Weekly / 17 May 2013 / 10 of 14

CENTRAL BANK RELEASES FOR 2013

CENTRAL BANK RELEASES FOR 2013


JANUARY 2013 3 : FOMC Minutes (Dec) 9th: BoT 10th: ECB, BoE 11th: BoK 16th: COPOM 17th: BoC 18th: HKMA 22nd: BoJ 23rd: BoE Minutes 24th: BSP 29th: RBI 31st: RBNZ, FOMC, BNM
rd

FEBRUARY 2013 5 : RBA 7th: ECB, BoE 8th: RBA SNP 13th: BoJ 18th: HKMA 19th: BoJ Minutes, RBA Minutes 20th: BoT, BoE Minutes
th

MARCH 2013 5 : RBA 6th: COPOM 7th: ECB, BoE, BoJ, BNM 8th: BoC 12th: BoJ Minutes 14th: RBNZ, SNB, BSP, BoK 19th: RBA Minutes, HKMA 20th: BoE Minutes 21st: RBA Bulletin, FOMC, CBC
th

APRIL 2013 2nd: RBA 3rd: BoT 4th: ECB, BoE, BoJ 9th: BoJ Minutes 16th: RBA Minutes 17th: BoC, COPOM, BoE Minutes 20th: HKMA 24th: RBNZ 25th: BSP 26th: BoJ

MAY 2013 2 : ECB, BoJ Minutes, FOMC 7th: RBA 9th: BoE, BNM 10th: RBA SNP 18th: HKMA 21st: RBA Minutes 22nd: BoJ, BoE Minutes 27th: BoJ Minutes 29th: BoT, COPOM
nd

JUNE 2013 4 : RBA 5th: BoC 6th: ECB, BoE 11th: BoJ 13th: RBNZ, BSP 14th: BoJ Minutes 18th: RBA Minutes, HKMA 19th: BoE Minutes 20th: RBA Bulletin, FOMC, SNB, CBC
th

JULY 2013 2 RBA 4th: ECB, BoE 10th: BoT, COPOM 11th: BNM 16th: RBA Minutes 17th: BoC, BoE Minutes 20th: HKMA 25th: RBNZ, BSP
nd:

AUGUST 2013 1st: ECB, BoE, FOMC 6th: RBA 9th: RBA SNP 14th: BoE Minutes 17th: HKMA 20th: RBA Minutes 21st: BoT 28th: COPOM

SEPTEMBER 2013 3rd: RBA 5th: ECB, BoE, BoC, BNM 12th: RBNZ, BSP 17th: RBA Minutes 18th: BoE Minutes 19th: RBA Bulletin, FOMC, SNB, HKMA 23rd: CBC

OCTOBER 2013 1st: RBA 2nd: ECB 9th: COPOM 10th: BoE 15th: RBA Minutes 16th: BoT 19th: HKMA 23rd: BoC, BoE Minutes 24th: BSP 31st: RBNZ, FOMC

NOVEMBER 2013 5th: RBA 7th: ECB, BoE, BNM 8th: RBA, SNP 19th: RBA Minutes, HKMA 20th: BoE Minutes 27th: BoT, COPOM

DECEMBER 2013 3rd: RBA 4th: BoC 5th: ECB, BoE 12th: RBNZ, SNB, BSP 17th: RBA Minutes 18th: BoE Minutes 19th: RBA Bulletin, FOMC, HKMA

Notes: Entries are the dates of central bank interest rate announcements, unless specified as minutes or otherwise. Dates are indicative only and are subject to change by central bank authorities. 2013 dates are currently unavailable for a number of central banks at this stage, dates will be added as the 2013 schedules are released. Key: BI: Bank Indonesia; BNM: Central Bank of Malaysia (Bank Negara Malaysia); BoC: Bank of Canada; BoE: Bank of England; BoK: Bank of Korea; BoJ: Bank of Japan; BoT: Bank of Thailand; BSP: Central Bank of the Philippines (Bangko Sentral ng Pilipinas); CBC: Central Bank of the Republic China (Taiwan); ECB: European Central Bank; FOMC: Federal Open Market Committee; HKMA: Hong Kong Monetary Authority; RBA: Reserve Bank of Australia; RBI: Reserve Bank of India; RBNZ: Reserve Bank of New Zealand; SNB: Swiss National Bank; COPOM: Reserve Back of Brazil. Sources: Central bank websites

Australian Economics Weekly / 17 May 2013 / 11 of 14

FORECASTS
AUSTRALIAN ECONOMIC INDICATORS Economic activity (annual % change) Private final demand Household consumption Dwelling investment Business investment Public demand Domestic final demand Inventories (contribution to GDP growth) Gross National Expenditure (GNE) Exports Imports Net Exports (contribution to GDP growth) Gross Domestic Product (GDP) Prices and wages (annual % change) Inflation*: Headline CPI Underlying (RBA core)^ Wages Labour market Employment (annual % change) Unemployment rate (annual average %) External sector Terms of trade (annual % change) Current account balance: AUD bn % of GDP 12.8 -32.8 -2.3 -10.2 -54.4 -3.7 -3.4 -57.4 -3.7 -0.8 -51.1 -3.2 -3.3 -25.3 -1.5 1.8 5.1 1.0 5.2 1.3 5.6 1.5 5.8 1.2 5.9 3.3 2.7 3.7 1.8 2.4 3.6 2.0 2.2 3.2 2.3 2.2 3.3 2.4 2.4 3.4 5.6 3.3 0.7 17.3 -0.2 4.2 0.3 4.6 -0.8 10.8 -2.2 2.4 5.3 3.2 -4.5 16.1 2.4 4.6 0.0 4.6 6.3 6.8 -0.1 3.6 3.5 2.6 3.9 6.4 -2.5 2.2 -0.1 2.1 6.7 3.9 0.6 2.7 1.9 3.2 5.9 -2.8 1.4 1.8 0.0 1.8 6.1 0.5 1.3 3.1 0.6 3.0 6.6 -8.4 1.8 0.9 0.0 0.8 6.8 -6.9 3.0 3.8 2011 2012 2013F 2014F 2015F

* Includes carbon tax. ^ Average of RBA trimmed mean and weighted median statistical measures

AUSTRALIAN INTEREST RATES RBA cash rate 90 day bill 3 year bond 10 year bond 3s10s yield curve 3 year swap 10 year swap INTERNATIONAL INTEREST RATES RBNZ cash rate NZ 90 day bill US Fed funds note US 2 year note US 10 year note Japan call rate ECB refinance rate UK repo rate

CURRENT 2.75 2.78 2.50 3.16 0.66 2.86 3.81

JUN 13 2.75 2.90 2.50 3.10 0.60 2.80 3.70

SEP 13 2.75 2.85 2.40 3.10 0.70 2.70 3.60

DEC 13 MAR 14 JUN 14 2.50 2.65 2.40 3.20 0.80 2.80 3.70 2.50 2.65 2.55 3.35 0.80 2.95 3.85 2.50 2.65 2.80 3.60 0.80 3.20 4.10

SEP 14 2.50 2.65 3.10 3.90 0.80 3.50 4.40

DEC 14 MAR 15 2.50 2.65 3.50 4.30 0.80 3.90 4.80 2.75 2.90 3.90 4.60 0.70 4.30 5.15

JUN 15 3.00 3.15 4.30 4.90 0.60 4.70 5.45

SEP 15 3.00 3.15 4.50 5.10 0.60 4.90 5.65

DEC 15 3.00 3.15 4.90 5.40 0.50 5.30 5.95

CURRENT 2.50 2.65 0.25 0.23 1.88 0.10 0.50 0.50

JUN 13 2.50 2.75 0.25 0.30 1.80 0.10 0.75 0.50

SEP 13 2.50 2.75 0.25 0.30 1.80 0.10 0.75 0.50

DEC 13 MAR 14 JUN 14 2.50 2.75 0.25 0.30 2.00 0.10 0.50 0.50 2.75 3.17 0.25 0.40 2.25 0.10 0.50 0.50 3.00 3.25 0.25 0.50 2.50 0.10 0.50 0.50

SEP 14 3.00 3.25 0.25 0.60 2.70 0.10 0.50 0.50

DEC 14 MAR 15 3.25 3.67 0.50 0.80 3.00 0.10 0.50 0.50 3.50 3.75 0.75 1.00 3.20 0.10 0.50 0.50

JUN 15 3.50 3.75 1.00 1.20 3.40 0.10 0.50 0.50

SEP 15 3.75 4.17 1.25 1.50 3.60 0.10 0.50 0.50

DEC 15 4.00 4.25 1.50 1.80 3.90 0.10 0.50 0.50

Australian Economics Weekly / 17 May 2013 / 12 of 14

FORECASTS

FOREIGN EXCHANGE RATES CURRENT Australian exchange rates AUD/USD NZD/USD AUD/ AUD/ AUD/ AUD/NZD AUD/CHF AUD/CNY AUD TWI USD/ /USD / /USD / USD/CHF USD index Asia exchange rates USD/CNY USD/HKD USD/IDR USD/INR USD/KRW USD/MYR USD/PHP USD/SGD USD/THB USD/TWD USD/VND PGK/USD FJD/USD 6.14 7.76 9781 54.9 1117 3.02 41.2 1.26 29.79 29.97 20985 0.454 0.546 0.98 0.81 99.8 0.76 0.64 1.20 0.94 5.99 75.5 102.3 1.29 131.6 1.53 0.84 0.97 83.9

JUN 13 1.05 0.84 105.0 0.80 0.70 1.25 0.98 6.51 79.7 100.0 1.32 150.0 1.50 0.88 0.93 82.6 6.20 7.78 9900 52.5 1050 3.04 40.3 1.24 30.40 29.40 20850 0.488 0.566

SEP 13 1.05 0.84 110.3 0.78 0.71 1.25 0.98 6.46 80.0 105.0 1.34 154.4 1.47 0.91 0.93 82.7 6.15 7.80 9800 52.0 1040 3.03 40.1 1.25 30.30 29.30 20900 0.488 0.566

DEC 13 MAR 14 JUN 14 1.05 0.84 110.3 0.77 0.69 1.25 0.97 6.41 79.4 105.0 1.37 159.6 1.52 0.90 0.92 81.3 6.10 7.80 9800 51.5 1030 3.02 39.8 1.25 30.20 29.20 20900 0.488 0.566 1.05 0.84 110.3 0.75 0.67 1.25 0.95 6.35 78.9 105.0 1.40 163.8 1.56 0.90 0.91 80.0 6.05 7.80 9750 51.0 1020 3.01 39.7 1.25 30.10 29.10 1.05 0.84 115.5 0.73 0.66 1.25 0.93 6.30 78.9 110.0 1.44 173.8 1.58 0.91 0.89 79.0 6.00 7.80 9750 50.5 1010 3.00 39.6 1.25 30.00 29.00

SEP 14 1.03 0.83 113.2 0.69 0.63 1.25 0.90 6.13 76.7 110.0 1.50 179.3 1.63 0.92 0.87 76.9 5.96 7.80 9700 50.0 1000 2.99 39.5 1.25 29.90 28.90 21000 0.488 0.566

DEC 14 MAR 15 1.01 0.81 110.9 0.66 0.61 1.24 0.87 5.97 74.8 110.0 1.53 182.6 1.66 0.92 0.86 75.8 5.92 7.80 9700 49.5 990 2.98 39.4 1.25 29.80 28.80 21000 0.488 0.566 0.99 0.80 108.7 0.65 0.60 1.24 0.86 5.78 72.9 110.0 1.53 182.6 1.66 0.92 0.87 75.9 5.85 7.80 9000 47.5 990 2.97 40.0 1.25 30.30 28.70 21000 0.488 0.566

JUN 15 0.97 0.78 106.5 0.63 0.58 1.24 0.84 5.62 71.3 110.0 1.53 182.6 1.66 0.92 0.87 75.9 5.80 7.80 8900 47.0 980 2.96 40.0 1.25 30.30 28.60 21000 0.488 0.566

SEP 15 0.95 0.77 106.5 0.63 0.58 1.24 0.84 5.62 69.6 110.0 1.53 182.6 1.66 0.92 0.87 75.9 5.75 7.80 8800 46.5 970 2.95 40.0 1.25 30.20 28.50 21000 0.488 0.566

DEC 15 0.93 0.76 106.5 0.63 0.58 1.24 0.84 5.62 68.0 110.0 1.53 182.6 1.66 0.92 0.87 75.7 5.70 7.80 8700 46.0 960 2.95 40.0 1.25 30.10 28.50 21000 0.488 0.566

International cross rates

20950 20950 0.488 0.566 0.488 0.566

Pacific exchange rates

Australian Economics Weekly / 17 May 2013 / 13 of 14

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Australian Economics Weekly / 17 May 2013 / 14 of 14

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