In the heartland of Australia right now, life is looking even better. Earlier this year, finance broker Finlease predicted that the economy was never in as bad a shape as many analysts were suggesting. So we looked at the world through the eyes of a small business operator, we called him 'Barry the Builder' and his family. What we now find is that for Barry, his wife Betty and the two children, as predicted things, are looking much brighter than others had anticipated.
It's not only the Barry the Builders of this world who are smiling, the likes of Terry the Teacher, Brian the Banker and Warren the Worker are feeling pretty good as well. Recent economic data indicates that Australia is the only developed country in the world to have shown positive growth, for the 12 months ended June 30 2009. No wonder the boat people are going overboard to get into this country.
So, exactly how lucky are we? To understand this better, Finlease has a close association with banks like Westpac and NAB whose economists conduct business surveys that show the financial health of our nation. Pretty much in line with their predictions, the Australian economy expanded by 0.7% for the June quarter according to the Westpac Melbourne Institute Leading Index. In the same period, while the rest of the world by and large was still stalled or moving backwards.
According to the National Bank Business Survey for August, those in small business are feeling more confident, with Barry the Builder and his mates feeling particularly chuffed. And why wouldn't they, with the Government's Free $1600 Insulation Grant in full swing. In NSW, the 50% reduction in stamp duty for purchases of new homes under $600,000 is providing further impetus while nationally there's also $8.6bn budgeted to be spent on schools in 2010. Not surprisingly, a massive 64% of those in the construction industry are predicting better times ahead, also according to the NAB survey. Looking at the bigger picture, 34% of respondents were feeling more optimistic about the immediate future.
Even though the various first home buyer's grants have been scaled back, real estate analysts are now reporting much higher auction clearance rates than at the equivalent times last year. Stronger results in the busy Sydney and Melbourne markets indicate buyers are feeling more confident despite the anticipated interest rate rises.
For 'Warren the Worker', there are more opportunities out there. The ANZ survey for August showed that newspaper ads rose by 5.5% for August, a sharp contrast with a 0.4% fall in the previous period. Even the predicted 8.5% unemployment rate by late 2010 has been scaled back to an anticipated 7.5%, while current figures show 5.8% unemployment as at October, 2009.
Our trading partners must also be feeling more confident with export intentions up by 21.2%, that's a 10 month high, as reported in the NAB survey. What this means is that more exporters are predicting improved conditions ahead. In the warehouses, stock levels continue to fall, so sooner or later stock will need to be replenished to meet the demand and that in turn will mean more jobs, according to leading economists. Westpac has predicted that exports will pick up for the 3rd quarter of 2009 as trading partners like China show increased demand for our wares.
Perhaps the government's Investment Allowances are starting to have an effect. According to the Westpac Capital Expenditure (CAPEX) survey for April to June, equipment sales were up by 5% as businesses looked to tool up with new vehicles and equipment, while reducing their tax liability. This in turn boosted demand for credit so all those 'Brian the Bankers' were feeling good.
For private consumers, demand rose 0.8% for the second quarter of 2009 as consumers put their hands in their pocket and many found an extra $900 to spend, courtesy of the Government's stimulus spending.
The only ones feeling short-changed have been the likes of Murray the Miner and his family. The mining industry slipped (-24.7%) due to huge falls of 30 - 60% in commodity prices, as the world's fires were being fuelled by cheaper coal. Looking ahead, the picture is looking brighter. Economists predict the big winner will be Western Australia where the recently won Gorgon LNG project is poised to reignite the mining boom and lift the state out of its recent slump together with a further $25 billion to India.
Finlease would like to thank the banking industry for keeping close tabs on the economy, and has felt compelled to share this good news with the rest of the community. Further news can be found at www.finlease.com.au .