Hello everyone. Welcome to the Smart Market Insights here on Kalkine TV. I’m Sage,
and today we will be shining some light on How is Australia’s current economy
and will be taking a quick glance at the economic indicators.
When the world economy is battling with the repercussions of the Russia-Ukraine war,
Australia's economic conditions seem to be showing signs of strength. The
latest economic data released by the Australian Bureau of Statistics reveals that the economy is
standing in a relatively better position than feared despite war-driven uncertainties. The
ABS has recently released updated numbers on dwelling approvals,
job vacancies for February 2022 and business conditions for March 2022.
Let’s take a closer look at the economic data that is lifting investor sentiment to some extent.
Dwelling approvals in Australia rose by a massive 43.5% in February after a significant drop of
27.1% in January. Of the considerable rise seen in dwelling approvals, only 16.5% belonged to private
sector housing. Also, private sector dwellings excluding housing increased substantially by
78.3%, majorly driven by a surge in apartment approvals in New South Wales and Victoria. Lack
of adequate housing has been a significant issue in Australia, especially after buyer demand broke
all records in the previous year. Meanwhile, with private housing becoming increasingly
unaffordable, apartments have attracted individuals who wish to live on rent.
The construction of apartments and townhouses has taken centre stage to help alleviate the
housing shortage in Australia. Amidst robust property market conditions,
the value of total buildings approved also rose by 67.5% in February to AU$14.28 billion.
Moreover, the value of non-residential buildings surged by an astonishing 132%
last month following a fall in January. Many public developments fueled this during the month,
including approval for 14 projects valuing over AU$30 million. These strong numbers for
non-residential buildings made February data the second highest on record after March 2021.
Sooo... Let's now take a look at which jobs were in demand in Australia in February 2022?
Interestingly, February 2022 was also a month of rising job vacancies across Australia.
As per ABS, a total of 423,500 job vacancies in February made up for about a 7% increase
from November 2021. Moreover, the level of job vacancies increased by a colossal 86%
over February 2020, before the pandemic-related lockdowns. Job vacancies in February 2022 were
200,000 more than in February 2020. According to some experts, the robust vacancy data backs the
case for a sustained drop in the unemployment rate below the 4% threshold, which was last
seen in the early 1970s. These speculations are fuelled by the generous budget announcement by
the Federal government. Meanwhile, the Reserve Bank of Australia expects the unemployment rate
to hit 3.75% this year, breaking the decades-old norm. February's job vacancies accounted for 2.7%
of all jobs in the December quarter of 2021, representing the highest share in the series
in about three decades. It is worth noting that the December quarter laid the foundation stone
for a drastic improvement in the employment statistics. Despite improved job demand,
many businesses continued to report difficulties in filling their vacancies. The highest growth was
seen across consumer-facing industries, which have drastically rebounded since the pandemic.
All states and territories also showcased a large bounce back in job vacancy data from pre-pandemic
levels, with public and private sector vacancies rising over the three months to February.
Soooo..... Is inflation expected to rise in Australia?
The momentum gained in business conditions towards the 2021 year-end seems to have been disrupted due
to the Russia Ukraine war. Heavy sanctioning and severing political ties with Russia have worsened
global supply chains, fuelling inflationary concerns. Ongoing pressures have forced
businesses to incur higher production costs, forcing them to increase the prices of their
goods and services. The ABS data on Business Conditions and Sentiments for March 2022 reveals
that 39% of all businesses expect the price of their goods and services to increase
more than usual in the next three months. Additionally, 40% of businesses reported
higher operating costs over the last month. As staff shortages became more pronounced, 19%
of employing firms had their staff unavailable due to COVID-19. Interestingly, business
expectations were much better during the same time last year. In March 2021, 24% of businesses
reported higher operating costs over the previous month, almost half of the current proportion.
In addition to operating costs, staff-related costs, salaries, fuel prices, business overheads,
and consumer demand have impacted the prices of goods and services offered by businesses.
Well, that’s all for now. We will be back again with the exclusive Smart
Market Insights Show on Monday. Till then, keep watching Kalkine TV for the latest
market updates and related insights. I’m Sage, signing off