Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

'Must-read, must-follow, one of the finest analysts in Australia' - Stephen Koukoulas, ex-Senior Economics Adviser to Prime Minister Gillard.

'One of Australia's brightest financial minds, a must-follow for accurate & in-depth analysis' - David Scutt, Business Insider.

'I've been investing 40 years yet still learn new concepts from Pete; one of Australia's finest young commentators' - Michael Yardney, Amazon #1 bestseller.

'The most knowledgeable person on Aussie real estate - loads of good data & charts, the most comprehensive analyst I follow in Australia' - Jonathan Tepper, Variant Perception, 2 x NYT bestseller.

'Superlative work' - Grant Williams, founder RealVision.

Thursday, 8 October 2015

Services & commodities exports

Services exports

The latest international trade data showed services exports rising to a new monthly high on a trend basis of $5.3 billion.

This is an increase of +4.4 per cent over the year and a positive sign for the economy.

To put these figures in context, charted below are rolling annual services exports (blue line) charted against the combined value of iron ore, coal, LNG and gold exports (red line). 

Summarily services exports have been increasing solidly - which is helpful - but the outlook for commodities exports inevitably holds more sway.

Over the months ahead the value of commodity exports should begin to increase as projects the Roy Hill development (iron ore) and the Gladstone natural gas venture (LNG) at last begin to kick into gear.

According to D. Knox the first Santos GLNG production is underway and on schedule, with the first $25 million shipment expected to be on its way this week. 

Over the year ahead GLNG exports could add up to $1.5 billion to Australia's trade accounts, and when the project is fully operational it is expected to have the capacity to produce up 7.8 million tons of LNG per annum.

Meanwhile the Roy Hill project will reportedly ship its first iron ore cargo within the next fortnight.

We can therefore expect commodity export volumes to strengthen over the year ahead. 

What kind of downward pressures this could put on iron ore prices in particular is another question...


The all-important Housing Finance data will be released later this morning.

You can see what happened last month in my previous blog post here.

Will owner-occupiers pick up the slack from inevitably slowng investor loan volumes?

Market consensus is calling for a +5 per cent mointh-on-month uplift in the number of owner-occupier approvals.

It will certainly be very interesting to see what happens at the state level.

In dollar value terms trend owner-occupier lending in New South Wales soared to a record high in July.

In case like me you're a tad dubious about the seasonal adjustments and trend estimates assumptions, as you can see the original data below, NSW recorded its biggest ever month in July, exploding by more than +28 per cent higher than the prior corresponding period.

One to watch with interest.