Hunter Research Foundation's economist Dr Alan Rai presents the latest Hunter Economic Indicators research findings at the Hunter Economic Breakfast, a Hunter Innovation Festival event, in July 2015

1. IS THE ECONOMIC
STORM OVER?
Alan Rai, Principal Economist

2. WHAT TYPE OF ‘ECONOMIC STORM’?
PERHAPS NOT THE ONE YOU’RE THINKING
• China-driven mining investment downturn
– Worse, economically, than April 2015 or Pasha
Bulker storms

3. PRESENTATION OUTLINE
• Economy’s ‘pulse’ improving
– Lower unemployment
– Improved confidence
• Can/will this be sustained?
• Businesses need to continually
innovate to be competitive
– ‘Think global, act local’

4. REGIONAL ECONOMY
A ‘pulse check’

5. UNEMPLOYMENT
Construction sector leading the way
FALLING…BUT REMAINS HIGH
0
5
10
15
20
0
5
10
15
20
Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul
Hunter Youth
Hunter
Source: ABS
NSW
2010 2011 2012 2013 2014 2015
% %

6. • Record low interest
rates
– Helps construction sector
– 50% chance of another cut
by year-end
• Lower Australian dollar
– Helps our exporters and import-competitors
STORM RECOVERY TOOLS

7. LOWER A$
20% more price-competitive globally than a year ago
HELPING OUR EXPORTERS
60
70
80
90
100
110
0.7
0.8
0.9
1
1.1
1.2
Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul
Basket of currencies
(RHS)
US$ per A$
(LHS)
Source: RBA
2010 2011 2012 2013 2014 2015
US$ Index

8. CONSTRUCTION SECTOR
SHELTER FROM THE STORM
200
400
600
800
1000
1200
200
400
600
800
1000
1200
Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul
Hunter building approvals (p.a.)
Source: ABS
Residential
Non-residential
2010 2011 2012 2013 2014 2015
$m $m
Growth in both detached and higher-density housing

9. RESIDENTIAL INVESTMENT
SYDNEY VS THE HUNTER
Clearer skies in Sydney (to date)
1000
2000
3000
4000
5000
12000
24000
36000
48000
60000
Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan
Dwelling approvals (p.a.)
Source: ABS
NSW
(LHS)
Hunter
(RHS)
2010 2011 2012 2013 2014 2015
No. No.

10. Lower unemployment (recently) helps too
HOUSE PRICES CLOSE TO HOME
BOOSTED BY LOW INTEREST RATES
90
100
110
120
130
140
90
100
110
120
130
140
Jun Dec Jun Dec Jun Dec Jun Dec Jun
Sources: HRF; Pricefinder; REINSW
2011 2012 2013 2014 2015
Lake Macquarie
LGA
Newcastle
LGA
Hunter Balance
Index Index

11. Job losses lowers buying intent, even when
rates fall
DRIVERS OF HOUSE PRICES
NOW WORKING IN UNISON
0
3
6
9
12
40
50
60
70
80
Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan
Good time to buy property in next 3 months?
Sources: ABS; HRF; RBA
Share of households
responding 'yes'
(LHS)
Unemployment
(RHS)
2010 2012 2013 2014 2015
Mortgage rate
(RHS)
2011
% %

12. Unemployment likely to continue falling
HUNTER’S UNEMPLOYMENT
LOOKING AHEAD
0
0.03
0.06
0.09
0.12
0.15
30
35
40
45
50
55
Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan
* Value above (below) zero indicates increase (decrease) in employment
Source: HRF
Firms citing lack of sales
as their primary concern
(LHS)
Change in hiring intentions
(RHS)*
2010 2011 201420132012 2015
% Index

13. ECONOMIC OUTLOOK
Contrast with confidence at national level
GREAT(ER) EXPECTATIONS
-0.2
-0.1
0
0.1
0.2
0.3
0.4
-0.2
-0.1
0
0.1
0.2
0.3
0.4
Jan Jul Jan Jul Jan Jul Jan Jul Jan Jul Jan
Outlook for next 12 months
Businesses
Consumers
Source: HRF
2010 2011 2012 2013 2014 2015
>0: optimistic, <0: pessimistic
Index Index

14. • China’s property
and financial
markets
ECONOMIC HEADWINDS
POTENTIAL STORMS ON THE HORIZON?
• Ελλάδα!

15. ECONOMIC HEADWINDS
STORMY TIMES
0
6
12
18
24
30
0
6
12
18
24
30
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul
Financial market volatility*
* Standard deviation of intra-month daily prices
Sources: Google Finance; HRF; RBA
ASX-200
A$
2013 2014 2015
Index Index
Australia indirectly impacted by ‘Grexit’ via
financial markets – not direct trade links

16. • Strengthening pulse
– Lower unemployment
– Higher confidence
– Will the beat get stronger?
• No time for complacency
– ‘Think global, act local’
HUNTER’S ECONOMIC PULSE
POST-STORM ECONOMIC RECOVERY

17. ICT ADOPTION
Enabling a ‘think global, act local’ mindset

18. CONTEXT
FAILING TO INVEST…IS INVESTING IN FAILURE
• Online, globally-connected economy
– ICT: cost-effective method of global reach
• ICT doesn’t guarantee success
– But no presence is virtual guarantee of failure

19. ‘THE INTERNET OF THINGS’
CONSUMERS INCREASINGLY ONLINE
Sharpest rise been in social media usage
0
20
40
60
80
100
Buying goods and
services
Banking Accessing social media
Hunter residents’ internet use
2009 2011 2013 2015
Source: HRF
%

20. TO PROMOTE…GO REMOTE
ADVERTISING ON WEBSITES
Interesting findings…so what?
0
20
40
60
80
Yes No No website
Hunter businesses’ advertising on websites
2009 2011 2013 2015
Source: HRF
%

21. STRATEGIC IMPLICATIONS
WHAT DO OUR FINDINGS MEAN FOR BUSINESSES?
• Integrated multi-platform online presence
– Website and social media presence
– Platforms are integrated with each other
– Visually-engaging and stimulating content

22. STRATEGIC IMPLICATIONS
WHAT DO OUR FINDINGS MEAN FOR BUSINESSES?
• Responsive websites (and Google)
• Invest in search engine optimisation
• Facilitate online payments

23. KEY BARRIERS
WHY IS HUNTER ICT INVESTMENT NOT HIGHER?
• Cost, lack of knowledge & resources
– Don’t have to ‘go it alone’
• ICT is an investment, not an expense
– Not investing is setting up for failure

24. Delivering insights that move the
Hunter forward
Thank you