02/06/2010

Economic Update: On Cruise Control

Currently, our economy is growing, but conditions are extremely varied across the different sectors and regions. Consumer confidence and spending has been particularly subdued but business investment has been strong in the past two months. The Banks have indicated that new housing loan approvals have recently slowed but the overall level of home mortgage growth across Australia has remained reasonable. The ability of businesses to access loans from the banks has also improved during autumn.

During the global financial crisis, candidates in the 25 years and younger age demographic had the largest problems finding work as employers sort highly skilled and experienced staff. But that has now significantly changed, all the major age groups are finding jobs ! The job market continues to tighten with unemployment now at an amazingly low 5.3%. The high level of employment is an excellent indicator of employers’ optimism on the growth outlook for Australia in the near term. Additionally, all key business surveys are now showing that major staff hiring by business will occur, along with a skills shortage, during late 2010 and into 2011.

Therefore, despite the Federal Government’s new ‘super’ tax on the mining sector and the current sovereign debt problems in Europe, all indications are that the Australian economy will continue to grow during the next two to three years. We believe that domestic GDP growth will be approximately 3% during 2010 and then push towards 3.5% in 2011. However, the European instability coming so soon after the global economic crisis may cause some short term unsteadiness in our financial, credit and share markets over winter.

 Ross MacMillan holds a Bachelor of Commerce (Accounting, Finance and Systems) from the University of NSW, he is a member of the Institute of Chartered Accountants, member of the Securities & Derivatives Industry Association and a fellow of the Financial Services Institute of Australia.
 

Important Note: These articles have been prepared for general circulation and are circulated for general informational purposes only; these articles should not be regarded as business or investment advice. The articles represent the views of the writers and are subject to change without notice. Additionally, while every care has been taken in the preparation of the articles no representation or warranty as to accuracy or completeness of any statement is given. An individual or organisation should, before any business or investment decision is made, consider the appropriateness of the information in this document, and seek professional advice, having regard to objectives, situation and needs. This document is solely for the use of the party to whom it is provided.

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