Economy

Updates on the state of the economy, growth, inflation, and employment.

Economy
Australia’s safe haven status attracts global capital
Australia’s growing appeal to investors as a stable democracy with sound economic fundamentals is being reflected in enhanced capital flows from around the world, which has helped drive the Aussie dollar higher against the greenback, up 11% since an early April low. Given that global investors don’t just cut and run out of a country, capital allocation decisions typically are not made quickly. However, there’s been a noticeable pick-up in offshore demand for Australian assets, especially fixed income, in the last couple of months. While initial waves of capital redeployment start with a bond maturity or a sale of equities in another country, they typically spread to less liquid real assets such as infrastructure and property. According to National Australia Bank’s chief economist Sally Auld, global asset allocators are comparing Australia’s outlook for trend growth, low inflation, full employment and central bank independence favourably against the less appealing credentials of other advanced economies. As a case in point, inflation is above target and growth is slowing in the U.S.; the same thing is happening in the UK, while the German economy hasn’t grown in five-and-a-half years. “If I was sitting offshore wi
Economy
Westpac: Sentiment slumps to 6-month low
Australian consumer sentiment has fallen to its weakest level in six months, with rising concerns about inflation and the economic outlook dragging confidence lower, according to Westpac’s latest monthly survey. The Westpac–Melbourne Institute Consumer Sentiment Index declined 3.5% to 92.1 in October from 95.4 in September, marking a return to firmly pessimistic territory. Matthew Hassan, Westpac’s Head of Australian Macro-Forecasting, said: “At 92.1, the October Index read is now at firmly pessimistic levels, albeit still well above the very weak reads seen during the extended ‘cost-of-living’ crisis.” The report found that sentiment deteriorated across most categories, reversing gains made earlier this year when expectations of interest rate cuts briefly lifted household morale. Westpac said the renewed slump came as consumers became increasingly uneasy about the persistence of inflation, which has shown signs of firming again. “Consumers appear to have been rattled by recent updates on inflation. ‘Partial’ measures released over the last month suggest annual inflation has lifted back towards the top of the RBA’s 2–3% target range,” the bank said. The biggest declines were recorded in assessments of family fina
Economy
US truck tariffs begin 1 November, Trump says
The United States will impose a 25% tariff on medium and heavy trucks from 1 November, according to President Donald Trump. Trump previously said in September that the U.S. planned to add tariffs on heavy trucks, alongside announcements of new tariffs on furniture, lumber, and pharmaceuticals. He has not offered details on how this would be implemented. “Beginning November 1st, 2025, all Medium and Heavy Duty Trucks coming into the United States from other Countries will be Tariffed at the Rate of 25%,” Trump wrote on Truth Social. The U.S. Chamber of Commerce had recommended against truck tariffs in May, saying the top sources of trucks are all U.S. allies. Mexico is the U.S.’ largest source of medium and heavy trucks, followed by Canada, Japan, Germany, and Finland. Trucks can currently be imported to the U.S. without tariffs if at least 64% of their value originates in North America, due to the 2018 United States-Mexico-Canada Agreement free trade pact. The U.S. also agreed to a 15% tariff on light-duty vehicles in trade agreements with the European Union and Japan earlier this year. Stellantis has lobbied the administration for an exemption to a potential truck tariff, as this could impact the medium-duty Ram
Economy
G7 nations pressure countries still buying Russian oil
Finance ministers from the Group of Seven advanced economies, including Britain, Canada, France, Germany, Italy, Japan and the United States, have agreed that it is time to "maximise pressure on Russia's oil exports". By taking coordinated action to increase pressure on countries continuing to increase their purchases of Russian oil, the G7 plans to reduce the revenue that Moscow needs to sustain its war with Ukraine, which began in February 2022. Further efforts to cut off Russian revenues have also seen the group’s finance ministers agree on the importance of trade measures and other restrictions, including tariffs, plus import and export bans on refined products sourced from Russian oil. While refraining from naming India or China, a G7 statement outlined plans to “target those countries that are continuing to increase their purchase of Russian oil since the invasion of Ukraine and those that are facilitating circumvention”. "We will take concrete measures to significantly reduce, with the objective of phasing out, our remaining imports from Russia, including on hydrocarbon imports," the G7 statement added. Yesterday’s statement by the G7 follows strong hits by the U.S. Trump Administration last month that it was
Economy
Australia's trade surplus falls as gold exports slump
Australia’s balance on trade plunged in the year ended August as exports fell and imports increased, according to data from the Australian Bureau of Statistics (ABS). The trade deficit in the period was $4.787 billion, compared with a surplus of $1.944 billion a month earlier, as the surplus narrowed to $1,825 billion in August from $6.612 billion in July. Non-monetary gold shipments drove a 7.8% fall in exports to $41.858 billion, while consumption goods were behind a 3.2% increase in imports to $40.033 billion in August. Non-rural and general merchandise exports also fell in August, while rural goods exports increased. Goldman Sachs said the fall in the trade surplus in August was larger than expected, noting that non-monetary gold exports were volatile. Consumption goods imports rose 5.8%, driven by non-industrial transport equipment. Among minerals commodities, the major export reductions were in thermal coal to China and Japan, Australia's two largest trading partners, iron ore lumps and hard coking coal to South Korea and liquified natural gas, while the main export increases were in iron ore fines to China and hard coking coal to India.

Economy
US private sector sheds 32,000 jobs in September
United States private sector employment shed 32,000 jobs in September, though pay rose by 4.5% from the previous year. Jobs were lost across most sectors, according to ADP’s National Employment Report. September’s losses were the largest decrease since March 2023. “Despite the strong economic growth we saw in the second quarter, this month's release further validates what we've been seeing in the labour market, that U.S. employers have been cautious with hiring,” said ADP chief economist Nela Richardson. Economists surveyed by Dow Jones had projected 45,000 jobs would be added in September. The goods-producing industry shed 3,000 jobs last month, while the service-providing industry lost 28,000. Leisure/hospitality recorded the largest decline, dropping 19,000 jobs. The only sectors to report an increase in jobs were education/health services, which posted 33,000 new jobs, and natural resources/mining, which added 4,000. Job losses were concentrated with small- and medium-sized businesses, which lost 40,000 and 20,000 jobs respectively. Businesses with more than 500 employees added 33,000 jobs. The Midwest was also the only major region to report a decrease in jobs. Around 63,000 jobs were lost across the Midw
Economy
US job openings stagnate, consumer confidence drops
United States job openings remained unchanged in August, while consumer confidence has fallen to its lowest level since April amid faltering economic conditions. There were 7.23 million job openings in the U.S. in August, per the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey, an increase of 19,000. The Conference Board’s Consumer Confidence Index dropped from 97.8 in August to 94.2 in September. “Consumers’ assessment of business conditions was much less positive than in recent months, while their appraisal of current job availability fell for the ninth straight month to reach a new multiyear low,” said The Conference Board Senior Economist, Global Indicators Stephanie Guichard. “Consumers’ write-in responses showed that references to prices and inflation rose in September, regaining its top position as the main topic influencing consumers’ views of the economy.” Write-in responses also saw the most mentions of jobs and employment since August 2024. The number of hires in August was 5.1 million, a slight decline from July’s revised 5.2 million. Hiring rates remained largely stable across industries. Total separations, including quits and layoffs, were 5.1 million in August. In July, there wer
Economy
RBA holds rates at 3.6%; inflation, growth risks linger
The Reserve Bank of Australia (RBA) has left the cash rate unchanged at 3.6%, in line with market expectations, as policymakers weighed a mix of rising domestic demand, sticky inflation, and heightened global uncertainty. At its September meeting, the central bank said inflation had eased considerably but warned it may still surprise on the upside. "Both headline and trimmed mean inflation were within the 2–3 per cent range in the June quarter. Recent data, while partial and volatile, suggest that inflation in the September quarter may be higher than expected at the time of the August Statement on Monetary Policy," the minutes stated. The decision came after fresh consumer price figures showed headline inflation accelerating to 3% in August, its highest level since July 2024, driven by housing, food, and alcohol costs. Policymakers also pointed to stronger private demand as a key driver of economic momentum: "Data for the June quarter show that private demand is recovering a little more rapidly than expected, taking over from public demand as the driver of growth. In particular, private consumption is picking up as real household incomes rise and measures of financial conditions ease. "The housing market is strength
Economy
Trump unveils more tariffs on drugs, trucks and cabinets
United States President Donald Trump revealed a fresh round of tariffs late last week, targeting pharmaceuticals, heavy-duty trucks, and furniture. From 1 October, branded and patented drug imports will face a 100% levy unless manufacturers are building factories in the United States. Washington will also impose a 25% duty on all heavy-duty truck imports and 50% tariffs on kitchen and bathroom cabinets, with an additional 30% tariff on upholstered furniture set to begin next week. “The reason for this is the large scale ‘FLOODING’ of these products into the United States by other outside Countries,” Trump wrote on his Truth Social account. The measures arrive despite repeated calls from American businesses urging the White House not to expand tariffs. Generic drugs and firms with ongoing U.S. factory investments are exempt. The European Federation of Pharmaceutical Industries and Associations has pressed for “urgent discussions” to ensure patients in both the EU and U.S. are not harmed. European officials noted that exports should be protected from tariffs above 15% under a bilateral framework agreed earlier this year. The UK, which exported more than US$6 billion (A$1.91 billion) in pharmaceuticals to the U.S