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Tiptoeing on the Edge of a Productivity Sinkhole
- The current global economic upswing is occurring against a background of relatively poor productivity performance. We fear that if productivity growth doesn’t lift this could ultimately cut short the earnings cycle and equity market rally.
- In Australia and the US, economy-wide labour productivity is linked to trends in services output. Earnings performance in service industries has been weaker after the great recession than in the period prior. Consequently, capex has been cut, particularly in the US, even though it could ultimately lift productivity performance.
- Wholesale Trade, seems to be enjoying productivity gains, particularly in Australia. Retail Trade and Information Technology productivity growth have been on a positive path in Australia and the US. Professional and Scientific Services have been investing, but not seeing productivity gains. Transport Capex has been given tax breaks by successive Australian governments, but there is no evidence this has lifted industry productivity.
- Firms seem to have lost their mojo. During periods of weak economic growth, they normally take advantage of abundant labour and extract productivity gains. This hasn’t happened during the current expansion. In Australia, there has been less new businesses to invigorate industry with fresh ideas; the trend is similar in the US. Population ageing could be influencing this process.
Provider
Macro Strategy Advisors Pty Ltd
About us:
- The business is a Proprietary Limited Australian company that is owned and fully operated by Shane Lee from a small office in Sydney’s CBD.
- Shane worked for 17 years in Sydney-based senior research roles (economist, equity strategist and bond strategist) in global and regional investment banks and a domestic commercial bank prior to starting Macro Strategy Advisors. These roles straddled the asset classes making him uniquely positioned to advise multi-asset investors. He worked for the Reserve Bank of Australia (RBA) for 3 years as a housing, commercial property and equity market analyst and a liquidity forecasting specialist. He worked as a structural engineer in Queensland for 10 years prior to his career at the RBA.
Aim of our business:
- To partner with our clients in their aim to maximise returns. We provide timely, independent and thought-provoking research on thematic macro issues that are impacting or could impact financial markets. We aim to produce research that prompts our clients to question their assumptions.
Services:
- A fortnightly research note.
- Regular presentations and data support delivered by understanding our clients interests and investment process.
- We also in work in confidence to investigate, analyse and report on issues at our clients direction. This work is done on a project-by-project basis.
- As an Australian based business, the main focus is analysing how domestic and global issues impact Australian investors. However, our global and domestic insights are also valued by our offshore clients.
Our Edge:
- Our low cost base relative to our competitors allows us to provide a quality product at a reasonable cost.
- We are fully independent and don’t support a banking function or any third party. We have no interests other than providing our clients with the best possible research.
- Our focus is not point forecasting, but providing rigorous analysis and insight. We don’t routinely focus on the top or bottom 10% of likely outcomes to create a headline.
- Shane’s background in engineering has provided clients with unique insights into global infrastructure and domestic housing issues.
Shane Lee
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