Breaking News
Investing Pro 0
Cyber Monday SALE: Up to 54% OFF InvestingPro+ CLAIM OFFER

States and territories remain resilient despite rising inflation, interest rates

By Jacob CoccioloneMarket OverviewAug 26, 2022 09:17
au.investing.com/analysis/states-and-territories-remain-resilient-despite-rising-inflation-interest-rates-200522271
States and territories remain resilient despite rising inflation, interest rates
By Jacob Cocciolone   |  Aug 26, 2022 09:17
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Economists at one of Australia's largest banks have revealed the economy is enduring a soft landing, performing better than anticipated in the June quarter.

ANZ economists have released their quarterly 'Stateometer' report revealing economic performance was above trend for all states and territories, despite rising inflation and the commencement of the cash rate tightening cycle in the June quarter.

Declaring a soft landing, ANZ economists revealed economic momentum decelerated everywhere except Western Australia and the Northern Territory off the back of high commodity prices and strong merchandise trade.

Further, the consumer component of the Stateometer rose everywhere except the Northern Territory and Tasmania, reflecting resilience in consumption demand despite the slowdown and inflation pressures.

ANZ Stateometer June Quarter.JPG
ANZ Stateometer June Quarter.JPG

Source: ANZ Stateometer Q2 2022

ANZ Senior Economist Bansi Madhavani said based on the broad deceleration, three trends are clearly visible.

"First, rate hikes are filtering through," Ms Madhavani said.

"The Stateometer shows economies across the nation have begun to feel the pinch of rate hikes at least through housing. A surge in variable mortgage rates is affecting borrowing capacity which in turn is driving a slow down in housing prices despite very low rental vacancy rates.

"Second, inflation and cost of living pressures are biting into household confidence, but spending hasn’t fallen off a cliff yet.

"Third, the RBA is racing to neutral and beyond.

"The RBA’s nominal neutral interest rate assessment is likely in the 2-3% range, but we think it will lift its policy rate above neutral to control for inflation and inflation expectations."

ANZ economists have maintained the views of their previous forecast, expecting the RBA to lift the cash rate to 3.35% by the end of the year.

To get to this figure, the RBA would need to increase the cash rate 150 basis points between September and December.

Signs of spending momentum slowing in August

ANZ-observed spending data released Thursday revealed the daily average spend across the first 21 days of August fell a marginal 0.1% from figures recorded in July.

Dining and takeaway spending fell 2% in August, versus a rise of 2% over the same pre-COVID period in August 2019.

Shopping also fell 3% in August, compared to a 1% fall in the the same period in 2019.

ANZ economists Adelaide Timbrell and Madeline Dunk noted resilient household balance sheets and the strong labour market may dilute the impacts of rate hikes on spending in the near term.

"Consumer spending will slow as rates tighten," the economists said.

"The question is the speed of that slowdown, and how this evolves. Consumer confidence is still very low, though financial conditions confidence is back in positive territory."

States and territories remain resilient despite rising inflation, interest rates
 

Related Articles

David Bassanese
Twilight zone By David Bassanese - Nov 28, 2022

Week in review The third ‘Fed pivot’ trade this year – which essentially has been in place since mid-October – continued last week, with markets still basking in the growing...

States and territories remain resilient despite rising inflation, interest rates

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email