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Good economic news plus Turnbull has to equal growth!

Peter Switzer
28 October 2015

By Peter Switzer

For a speech in Brisbane yesterday, I simply put together a whole pile of good things that are going on in the economy right now that your favourite media outlet might have overlooked telling you about.

I’ll show you what I’ve found a little later, but the story I want to tell you today is that a developer came up to me after the breakfast event and said: “I agree with you. I’m seeing it in my business but my brother, who works in the big end of town in Sydney, says the big boys are negative.”

His fear was that my focus was at the small and medium end of town and he could be right. However, I did argue that if the SME part of the economy lifts ahead of the big end, it could be a case of one sector leading the other.

This is the chart that worries big business and a lot of economists. It shows capital expenditure plans and the big drop covers the 2015-16 plans! Not good. 

 

But plans can change. I like this chart better. It shows what has happened to the Oz dollar over a year. This shows how it has dived from over 92 US cents to 70 US cents in a little over a year!

That's a 24% depreciation and this country of ours grows on big depreciations. Over 2016, I think we’ll see more dollar drops.

This pro-growth development, which gradually helps businesses and then growth statistics, is on top of the following:

  • Annual credit growth at a six and a half year high.
  • A record 225,406 homes approved in 12 months.
  • Performance of Manufacturing Index at 52.1, which means the sector is expanding.
  • Job vacancies up 2.7% to 160,900 in August – the best in three years! Up 10.2% in a year, plus unemployment is 6.2% and the growth in the number of hours worked by employees is the best in four years.
  • Job ads up 3.9%, which is the best in 15 months and the series is up 14 out of the past 16 months.
  • Retail is up 4.5% in a year.
  • Car sales - record high of 1,143,109 for the year.
  • Performance of Services Index is at 52.3, which means it's expanding and recently was at a 7-year high.
  • Record tourists from China was 1,165,600 in year.
  • 2016 IMF growth at 3.6%, the best in five years.
  • Home loan growth best in 12 years.
  • Latest NAB business conditions is 9.1 or a five-year high.
  • NAB business confidence is up 0.8% to 5.1! 
  • Westpac consumer sentiment up 4.2% to 97.8.
  • Roy Morgan consumer confidence reading at a 15-week high.
  • Women consumer confidence up 6.1% to 96.3.
  • Work started on a record 211,484 new dwellings over the year to June, up 16.9%.
  • And I love this from the RBA only last week: “Members noted that overall growth was expected to have strengthened in the September quarter, with indications of growth in resource exports and dwelling investment.”

To this, add the news today that the Turnbull Government wants to create tax breaks for angel investors in start up businesses no older than two years and had revenue less than $1 million. It would cost Treasury about $50 million but it should be a smart money initiative.

Some time soon, an Innovation Statement is coming from the Government. This could help make the dream of Malcolm Turnbull — for us to become an innovation hub that might attract talent from around the world — come true.

This is all positive, outside the square stuff that adds to the growing snowball of confidence that I think is growing.

I didn’t like how Tony Abbott was shown the door but economically it might have been the door this economy had to have!

One last point. This good economic news plus the Turnbull ‘turn on’ effect and this ‘thinking outside the square’ stuff he brings is creating a vibe, to quote the lawyer in the film The Castle. This vibe could have growth implications that might get the big end of town more positive.

I damn well hope so.

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