macro economic review
Glenn Meekin, Chief Financial Officer

The economic turmoil is continuing in the US.  Jobs figures released for December 2008 indicated that employers shed more than half a million jobs in that month, one of the worst monthly results since 1945.  Employment declined by 524,000, far more than the fall of 473,000 forecast by economists.

More than 2.6 million jobs have been lost in the US over the past year and the unemployment rate has soared to 7.2%.  This is the highest level of unemployment since January 1993.  The US economy could lose a further one million to two million jobs in the coming months because all of the major indicators show the economy is deteriorating further.

The turmoil in the US is continuing to impact the global economy.  Exports in China have declined in December 2008 at the fastest pace in almost a decade.  Exports fell by 2.8% in December.  Meanwhile, business confidence in China slumped to an eight year low in the December 2008 quarter.

UK industrial production in November 2008 fell 2.3%, worse than the market forecast (-0.5%).

EC retail sales for November 2008 rose 0.6%, beating the market expectation of a flat outcome but there was a downward revision to October to show a fall of 0.6%.  German industrial production fell 3.1% in November 2008, worse than the market forecast of negative 2%, after a fall of 1.8% in October.

The global financial crisis is impacting the Australian economy on a number of different fronts.  Weak global growth is hurting Australia’s traded sector, tight financial conditions continue to impact the provision of finance across the economy and weak confidence is dampening spending.  Exporters have been hit particularly hard.  Australia’s international trade surplus was negatively impacted by $1.5 billion in November 2008, due mainly to a fall in exports.  This was due not only to falling commodity prices but also to lower mining volumes, which is of particular concern.

Sources: The Australian Financial Review, 12 January 2009. Pages 1 & 11: “Jobless Surge Prompts Obama to Boost Crisis Response” Anthony Hughes and Robert Guy.
The Australian Financial Review, 12 January 2009. Page 11: “Confidence at Eight Year Low” Colleen Ryan ANZ Australian Markets Weekly – 8 January 2009