The Australian economy

I'm sorry, I don't buy any of this “Labor and the unions wrecked Australia' shit.

This is economic collapse in the era of Peak Oil – in fact Peak Everything.

“Mish”, according to the sentiments in this article, should be happy with John Key and his cabal of bankster crooks

When NZ goes down the gurgler who's he going to blame?

Steve Keen has got it right at the end of the article.

Australia Manufacturing Collapses as Commodity Supercycle Stalls; Labor and Unions Wrecked Australia

Global Economic Analysis,

2 May, 2013

Australia fundamentals deteriorate rapidly as evidenced by a collapse in the PMI Manufacturing Index in April. 

 Key Findings

• Manufacturing activity contracted significantly in April as conditions weakened amid a strong Australian dollar, intense import competition, high energy costs and weak local confidence.

• The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) fell 7.7 points to 36.7 on a seasonally adjusted basis. (Readings below 50 indicate a contraction in activity with the distance from 50 indicative of the strength of the decrease.)

• This is the lowest level the Australian PMI® has recorded since May 2009, with many of the key sub-indexes also dropping to levels not seen since 2009. The three-month moving average in April fell to 42.2 points from 43.4 points in March.

• Contractions in activity were recorded in seven out of the eight manufacturing sub-sectors. Significant contractions were recorded in food, beverage & tobacco products; printing & recorded media; non-metallic mineral products; metal products; and machinery & equipment.

• Sharp declines in production, new orders and employment were recorded in April, while finished stocks and deliveries declined as well, albeit at a more moderate pace.

• Capacity utilization in the manufacturing sector fell 2.4 points to 68.6 (the lowest level since June 2009), consistent with the overall drop in activity in the sector.

• Exports continued to contract for the ninth consecutive month, as the exports sub-index fell to 24.5 in April. This was the lowest reading in the history of this sub-index (commencing in 2004).

• Significant contractions in manufacturing activity were recorded across most States, especially in Victoria where the record of activity fell 8.4 points to 29.1 in April, the lowest level on record.

New Orders

The new orders sub-index decreased by 7.0 points to 32.4 points in April (seasonally adjusted). This was the lowest level recorded for this sub-index since May 2009.

Employment

The seasonally adjusted employment sub-index decreased by 9.4 points to 39.3 in April, the lowest level since May 2009.

Inventories

Manufacturing inventories contracted again in April, with the sub-index falling 4.8 points to 46.4 (seasonally adjusted). The deliveries sub-index declined 7.3 points to 41.1, indicating that deliveries have been contracting since March 2012.

Australia PMI at a Glance

Series Data	Apr Index	Mar Index	Percentage Point Change	Direction	Rate of Change	Trend (Months)
PMI™	44.4	36.7	-7.7	Contracting	Faster	22
Production	41.7	33.1	-8.6	Contracting	Faster	13
Employment	48.7	39.3	-9.4	Contracting	Faster	18
New Orders	39.4	32.4	-7.0	Contracting	Faster	8
Inventories	51.2	46.4	-4.8	Contracting	From Expanding	1
Supplier Deliveries	48.4	41.1	-7.3	Contracting	Faster	14
Input Prices	65.5	57.0	-8.5	Expanding	Slower	131
Exports	27.4	24.5	-2.9	Contracting	Faster	9
Selling Prices	43.0	40.3	-2.7	Contracting	Faster	25
Average Wages	57.7	57.0	-0.7	Expanding	Slower	48
Capacity Utilization	71.0	68.6	-2.4	Decrease

Macro Alert From Steen Jakobsen 

Via email, Steen Jakobsen at Saxo Bank sent these comments ... 

 Macro Alert: Australia is seeing significant slow-down.

1. Australia's benefit from the Super Cycle in commodities is petering out in 2013. Mining investment to GDP will peak at 8%. This concept is supported by the RBA. 

2. There are significant reductions in pipeline projects due to lower general level of commodity prices and cancellations. 

3. The non-mining economy is weaker and getting weaker

4. China slow-down hits Australia

Massive Imbalances
Please note the massive imbalances in the PMI report. Input prices have been expanding for 131 straight months. Wages have been expanding for 48 months. Selling prices have been contracting for 25 months.
New orders and exports tell the story. Wages are too high. Margin pressures mount. Employment must drop and it did. The employment index was down a monstrous 9.4 points.
Labor and Unions Wrecked Australia
The labor party and unions wrecked Australia. This was invisible for years because a housing boom and China-fueled commodity boom masked the untenable nature of wage and property bubble growth.
Now, it's payback time. 
On September 14, prime minister Julia Gillard, leader of the Australian Labor Party will be thrown out of office in a landslide. Unfortunately, it will take years for Australia to recover from the damage caused by Labor.

Addendum - Comments from Steve Keen

Steve Keen blames both parties.
Via email, Keen says "The damage began under Labor with Hawke and Keating, was turbocharged by the Liberals under Howard, and simply maintained by Rudd/Gillard Labor. And unions have lost significant power all the way through--they've been bystanders, not active participants. It's instead been a series of distortions caused by a neoliberal philosophy that is shared by both parties." 

Hmm. Parties talk differently but act the same. Where have we seen that before?
In the US, it's on war, bailouts, and spending that always goes up. Romneycare and Obamacare were the same. For political purposes people pretend differences exist when they don't, except on some social issues.

Rio Tinto chief warns of

more job cuts

Rio Tinto chief Sam Walsh on Sunday warned of more job cuts as the mining giant works to make US$5 billion in savings by the end of 2014, but he was upbeat about demand for iron ore from China.

News Daily,

5 May, 2013

The comments follow the Anglo-Australian miner posting its first annual loss in 18 years in February, plunging US$2.99 billion into the red on writedowns on its Mozambique coal and aluminium businesses and a dip in commodity prices.

Rio has already shed staff in its Sydney and Melbourne offices and last week told employees of plans to nearly halve the number of jobs in London to around 262.

"There will be reductions," Walsh, speaking ahead of Rio's annual general meeting in Sydney on Thursday, told the Financial Review Sunday television programme when asked if more jobs would be lost.

"This is not easy. This is a process that is very very tough, but we need to get on top of our costs."

But he did not give an indication of the scale.

"We don't have targets for reductions in people," he said.

"We do have targets for reductions in costs. This is a process that is very, very tough.

"But we need to get on top of our costs, we need to have a business that will be competitive, and when I look at both our energy and aluminium businesses they are going through very tough times."

Walsh, who replaced Tom Albanese as chief executive after the poor February results, has vowed "aggressive" cost-cutting to achieve savings of more than $5 billion by 2014 and reduce capital expenditure to $13 billion this year.

He has also said Rio was focused on raising funds by selling assets to maintain its single-A credit rating, currently on negative watch from Standard & Poor's.

Despite a slowdown in China and debt strains in Europe and the United States weighing on mining companies in the past 12 months, Walsh was upbeat about demand for Rio's key product iron ore.

"The world is an uncertain place," he said.

"First quarter, we saw a dip in China, (but) we've seen increased commitment to infrastructure and an easing of credit and we expect that will flow through to steel production and of course iron ore demand."

He added that as the world's lowest cost iron ore producer "we're doing OK"