Doors opened and ‘primed for summer boom
Australia’s economy is ‘primed for a summer boom’ as the country emerges from an autumn and winter of lockdowns.
Australia’s economy is “primed for a summer boom” as the country emerges from lockdown, with the recovery spurred by massive government stimulus and the easiest monetary conditions in history.
In the wake of the COVID-19 downturn, Deutsche Bank strategist Tim Baker said “summer should see pent-up demand unleashed after months of heavy restrictions, most notably in Victoria”.
Mr Baker said record low interest rates, unprecedented levels of welfare spending, and recent tax cuts meant “policy support has never been more stimulatory”.
He noted that consumer confidence had recovered to “normal” levels, which made Australia a standout among advanced economies.
“Unlike in previous recessions, this accommodation won’t be unwound any time soon,” he said.
The optimistic assessment followed Reserve Bank deputy governor Guy Debelle’s forecast that the economy had returned to growth in the September quarter, technically ending the country’s first recession in almost 30 years.
A new NAB survey also revealed the mood among businesses in the September quarter lifted sharply from three months earlier. The report showed corporate Australia had recorded a “large turnaround” in profitability, trading and employment conditions versus three months earlier when the nation was emerging from the national lockdown.
While unemployment remains relatively high at 6.9 per cent — and is expected to climb towards 8 per cent by the end of the year — there was evidence the labour market had made strides towards normal levels of activity.
New data from online jobs portal Seek and professional networking site LinkedIn showed the number of job listings had returned close to levels achieved ahead of the health crisis. The Seek figures showed job listings on the site in late October hit 90 per cent of pre-crisis levels.
Seek managing director for Australia and New Zealand Kendra Banks said that Queensland joined Western Australia, South Australia, the Northern Territory and Tasmania as jurisdictions that had more job ads than pre-COVID levels.
The relaxation of restrictions in Victoria from October 18 had led to a 20 percentage point increase in job ads (rising from 56 per cent to 76 per cent) compared to pre-COVID levels.
Amid the raft of data points signalling an improving economy, NAB chief economist Alan Oster said the results of the business survey, while “encouraging”, were still well shy of offering a rosy operating environment for Australian businesses.
“Despite the strong gains, both conditions and confidence remain very weak,” Mr Oster said.
Conditions and confidence as measured by the survey remained depressed and well shy of their pre-COVID levels, the NAB report showed, suggesting corporate Australia saw a difficult path ahead, despite sharp improvements in recent months.
And the uneven nature of the COVID-19 recession means not all businesses will enjoy the fruits of a “summer boom”.
Nowhere is this more evident than in the retail sector.
On Thursday the Mosaic Group announced it would close its network of 250 stores, which includes household fashion names such as Rivers and Noni B, even as the boss of Bunnings on the same day tipped the home improvement boom would continue.
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