October is here, which means football fever and the holiday long weekend are behind us as we enter the final stretch towards Christmas. It’s traditionally a busy time for households and on the business and economic scene, as we prepare for the end of another year.
As expected, the US Federal Reserve lifted interest rates for the 8th time in September, by 0.25 per cent to a target range of 2.0-2.5 per cent. The US economy is growing strongly, with growth of 3.1 per cent forecast for 2018, full employment and inflation on target at 2 per cent. The Fed forecasts one more rate rise this year and three in 2019. Meanwhile, Australia’s cash rate remains at an historic low of 1.5 per cent. The growing differential between local and US rates pushed the Aussie dollar lower in September, down more than 1 per cent to around US72.5 cents.
Overall, our economy is in good shape. Australia’s record economic expansion is in its 28th year, with growth up 0.9 per cent in the June quarter, 3.4 per cent on an annual basis, the strongest in 6 years. The Budget deficit fell to $10.1 billion in 2017-18, the smallest in a decade, with more Australians in jobs and record company profits boosting tax revenues and reducing the welfare bill. Unemployment was steady at 5.3 per cent in August. Consumer and business confidence continue to fluctuate on political uncertainty; the ANZ-Roy Morgan consumer confidence index fell 0.7 per cent from a 5-week high to 117.2 in late September. The NAB Business Confidence index fell from 7 points to a 25-month low of 4.4 points in August.
Read more from our October 2018 update here:
- Planning for the future of a special needs child
- Housing prices off the boil
- Throwing yourself in deep to improve productivity
- Getting into the great outdoors
Contact us on 0883620060 to discuss your existing financial plan