Oz recession deepens

This is an unweighted composite index^ of the AIG (Australian Industry Group's) PMIs for manufacturing, services and construction, and S&P Global's PMIs for manufacturing and services.  The AIG indices have been smoothed with a 7-month centred moving average before inclusion in this composite index.

Conclusion: the Ozzie recession* continues.

^ Note on composite indices.

Since time series are subject to random month-to-month and quarter-to-quarter fluctuations, interpreting the data can be tricky. You can reduce this random variability by adding two or more statistically independent series together.  This will reduce the error term without affecting the underlying trend.  Or you can fit a moving average to the data, which also reduces the error term, as each month's "error" is statistically independent of the previous month's.  I tend to do both.  So, this composite index of 5 different time series, 3 of which have been smoothed before inclusion, should give us a much more reliable indicator of the economy than any single component.

* Note on the definition of a recession.

The conventional definition (in the media, anyway) is two quarters of consecutive negative GDP growth.   A moment's thought shows that this is not a useful definition.  Just one example—suppose GDP falls by 5% in Q1, rises by 0.1% in Q2 and falls again by 5% in Q3.  It is crystal clear that there has been a recession from Q1 to Q3.  The conventional definition would deny that a recession has taken place.  

Also, should you use GDP or GDP per capita?  If you have rapid population growth, as Australia has had over the last five years because of very high immigration, GDP per capita has on occasion fallen when total GDP has risen.  To most people that will "feel like" a recession, though one might argue that it isn't.

You could use smoothed GDP, by for example fitting a moving average to the data, and then seeing whether the moving average has declined.  Or, as I tend to, you could examine 30 or 50 or 100 series and see how many are falling or rising.  If more than half are falling, it's a recession.  That is what my diffusion indices attempt to estimate.

I haven't updated my Oz coinciding index or diffusion indices—I need to update my data banks, and the way I feel right now, that's all too tedious—but I'm quite certain Australia is in a recession.  However, I'll update my data shortly, and then confirm the exact month I think it started.

Home batteries go mainstream

From RenewEconomy

A new report released on the first anniversary of the launch of Australia’s Cheaper Home Batteries scheme has confirmed that 2025 was a record smashing year for small-scale storage, with 221,000 residential battery systems installed over the calendar year, adding nearly 5 gigawatt-hours of storage.

This number has since more than doubled – recent updates have put the total number of home battery systems installed through the federal rebate at more than 450,000, and counting, as the scheme ticks over into its second year.

But the Australian Battery Marker Report, published on Wednesday by SunWiz, documents a year where home batteries hit the mainstream and fundamentally changed the course of the consumer energy revolution.

In total, SunWiz says 221,000 systems were installed in 2025, compared with 72,500 the previous year, delivering an additional 4,790 megawatt-hours (MWh) of new storage capacity to the grid.

This, says the report, is equivalent to powering around 1.2 million homes over the four-hour evening peak period, or around 25 times the capacity of the Hornsdale Power Reserve – the world’s first ever big battery, installed in South Australia nearly a decade ago.

Most of the record new home battery capacity, of course, was installed in the second half of year, following the July 2025 launch of federal Labor’s Cheaper Home Battery rebate, the success of which has exceeded all expectations and led to the scheme being adjusted to make it last longer and go further.

“[This] wasn’t just a growth year for Australian batteries – it was a market transformation,” the report says. “We’re talking a threefold increase in system count and a fivefold increase in capacity versus 2024.  2025 … was the year [home batteries] went mainstream,” adds SunWiz founder and managing director, Warwick Johnston.

All told, nearly 5 per cent (4.6%) of Australian homes had a battery installed by the end of the year, and 13 per cent of all of the nation’s rooftop solar systems had added a battery.

2025 was also the year that Australian households fundamentally changed how they ‘do’ battery storage; system sizes nearly doubled, the battery-to-solar attachment rate soared, and people also started boosting the amount of rooftop solar they have, to fill their super-sized batteries.

Over the course of 2025, the average battery size jumped to 21.6 kilowatt-hours (kWh) compared with 11.8 kWh the year before, the report says.

It’s telling that while installations have increased threefold, capacity has increased fivefold,” says Johnston.

“Australian homes are benefiting from more modern and larger battery systems that are supporting the country’s emissions goals and their own back pockets at a time when energy costs have become such a major national concern.”

2025 was also the year that households were given a whole lot more choice on battery brands and offerings. The report names China-based Sigenergy as market leader by the end of the year, having only entered the local market in 2024. Fox ESS also re-entered the Australian market and by year’s end had captured 10 per cent of market share per kWh, while Tesla and BYD continued to slide.

Looking ahead, SunWiz forecasts continued momentum, and is predicting that a new record of 350,000 home batteries will be added in 2026 across the country.

“We’re looking at years of higher energy costs and uncertainty over those costs,” says Johnston. “That motivates Australian families to secure their own electricity supply.

“We anticipate installation volumes to 2030 will be shaped by the interplay of declining rebates, falling battery costs, rising electricity prices, and rising demand for energy self-sufficiently. On balance, these forces point to sustained demand. The boom is far from over.”

When this program was first announced by the government, critics said that it would only benefit the wealthy.  However, the huge jump in storage meant that gas set the price much less often, which cause a fall in the wholesale price of electricity, which led to benefits for the whole market.

It's happening—a super El Niño is coming

 

A clear and excellent explanation of El Niño, and why it's likely to be so bad this time.   Ben Miles is usually quite optimistic.  This time, he struggles to find something hopeful to say.  The world faces famine and climate disaster.  Are politicians planning for this?  Are you?  And what are we doing to reduce global heating, which is making this worse?

Plug-in solar is safe

Plug-in solar is a solar panel with an inbuilt inverter/transformer which converts the direct current (DC) of the solar panel into alternating current (AC) at the correct voltage of your home system.  All you have to do is put the solar panel in the sun, for example on a balcony or carport roof, and plug it in to your house's grid via a plug (socket).  It is widely used in Germany and other continental countries, some states in America have legalised it, and now it has been thoroughly tested in the UK, and found to be perfectly safe, provided it conforms to the regulations.

You can't run a house off a single panel, but it helps reduce your electricity bill, and it allows people who don't own their roof (flat-dwellers or renters) to share in the solar revolution.  A 400 watt solar panel (~1 metre x 0.7 metres) will provide about 1/3rd of your electricity demand during the solar peak (1-2 hours either side of local midday).  Portable house batteries (I'll do a post on them, shortly) will allow solar power to run your house when demand peaks, between 5-9 p.m.   In practice, many are at work when the sun is strongest, but need power at home in the evening.  So batteries plus plug-in solar will make a real difference to high electricity bills.

I intend to use a couple of plug-in solar panels to extend my rooftop panels when it is legalised in Australia.  I tried to add panels to the existing system on my roof, and was told that I would have to junk it entirely and pay for a brand-new system, even though what I had was working perfectly.  Insane—solar panels go on working for 30 years, though inverters only last 15.  But I had just put a new (larger) inverter in, and would have had to chuck that out, too!

This is a big step—plug-in solar is safe.  Your house won't burn down.  Electricians working on your electricity system won't electrocute themselves, nor will electricians working on the "poles and wires" in the street.  

After you've watched the video, check the comments too.  Some useful advice there.

Cattle Hustler

 By Gary Larson

Cost of living

 Michael de Adder

Voting rights

By David Horsey