5 April 2020
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State of Origin was great but GDP growth was greater!

Peter Switzer
6 June 2018

Ahead of the State of Origin NRL clash in Melbourne, I suggested that possibly the GDP growth number earlier on Tuesday could rival the big sporting showdown of state-against-state and mate-against-mate.

And it did!

Well, at least for me it did, with economic growth for the March quarter coming in at a big 1%, which took the annual growth to a rip-roaring 3.1%.

In case you’ve never committed this fact to memory, history shows that unemployment falls when economic growth beats 3%. So this is good news. And believe it or not, in the real world it’s even better than a State of Origin win!

(Please don't think I’m an egghead economist who hates footy, as I played for the Roosters’ rep team from the age of 11 to Jersey Flegg, and it was only an offer of a Masters of Commerce degree that took me off the footy field.)

But this economic growth number is a ripper and reinforces a lot of great economic news that has been building up over the past year. I’ve been hailing these positive developments as signs that our economy is better than the nervous Nellies and the perpetual pessimistic problem people out there have been trying to tell us about.

Now I’m not going to start crowing yet because I know an economy can make commentators roosters one day and feather dusters the next, but I want to lay out the great economic indicators that make me happy to be an optimist on the economy. Unusually, on the outlook for our economy, I’ve been on a unity ticket with Treasury and the Reserve Bank, who have copped some criticism from expert economists for their rosy forecasts. But these experts might have to eat some healthy helpings of humble pie, given these growth figures.

Let me update you on the good economic omens out there right now:

  • The March quarter growth was 1%. If we were Yanks, we’d multiply this by four and say we have 4% growth. Right now our US buddies have 2.2% growth!
  • This is the strongest expansion of the Oz economy in six years.
  • The 0.4% growth for the December quarter was upgraded to 0.5%.
  • 13 of the 19 industry sectors expanded in the March quarter. Strongest growth was by Administration and Support Services (+3.0%), Mining (+2.9%) and Manufacturing (+2.4%), which I love to see.
  • The CBA Purchasing Manager’s Index (PMI) for the services sector rose from 55.2 points in April to 55.9 points in May. The Australian Industry Group (AiG) Performance of Services Index (PSI) rose 55.2 points in April to 59.0 points in May – the highest level in over 13 years. Readings over 50 signify services sector expansion.
  • ANZ Job Advertisements rose by 1.5% in May after declining by a downwardly-revised 0.3% (previously: -0.2%) in April. Job ads are up 11.5% on a year ago. The number of jobs advertised (seasonally adjusted) was 179,245 in May – the strongest level in seven years. 
  • Over the past year, jobs rose by 332,200 (or 2.7%).
  • Retail trade rose by 0.4% in April after a flat outcome in March and a 0.6% increase in February.
  • Company operating profits rose by 5.9% in the March quarter to stand 5.8% up on the year. In the year to March, profits hit a record high of $326.7 billion, up 12.3% over the year.
  • Services sector investment hit a record high of $72.2 billion for the year to March. This sector is the biggest employer by miles in the Oz economy.
  • Despite all the barriers for property investors, private sector credit (effectively outstanding loans) rose by 0.4% in April after a 0.5% rise in March. Credit was up 5.1% over the year.
  • Despite a slowing housing sector, house approvals for construction rose by 0.7% and were up by 11.3% over the year to April, the strongest annual growth rate in over three years. In April, council approvals were at record highs for Melbourne (62,160 units) and Adelaide (10,759 units) and at 6½-year highs for Hobart (1,346 units) in rolling annual terms.
  • Currently, someone on the average wage needs to work for 23.2 weeks to afford a Ford Falcon – the best (lowest) result on record. Four years ago, the same worker would’ve needed to work almost three weeks longer to afford the same purchase.
  • And even the Budget woes are dissipating! In the 12 months to April 2018, the Budget deficit stood at $12.1 billion (less than 0.7% of GDP) – the smallest rolling annual deficit for nine years. We could see a surplus by the end of this financial year! Few experts tipped this good news.
  • The NAB business conditions index rose to a record high +21.1 points in April, up from an upwardly-revised +15.4 points in March (previously +14.1 points). The business confidence index rose to +10.1 points in April from an upwardly-revised 8.0 points in March (previously +7.4 points).
  • The Westpac consumer sentiment has shown optimists have outnumbered pessimists in seven of the past eight months. And this chart shows how positivity is coming to the consumers of Australia.


Any number over 100 means optimists are on top. And you can see how much better we’ve been feeling about our economic future since October 2017.

Sure, house prices are falling in Sydney but the fall is 4% and the rise over the past five years has been 70%. The RBA wanted house prices to ease up and that’s what we’re getting. But it comes as exports and business investment is kicking in.

Anyone who wants to remain negative about our economic future is either politically one-eyed or is socially conditioned to expect and virtually want to see bad news.

Well, for those poor souls, you’re going to have to suck it up because the economy is on the way up and every Aussie should be shouting “hooray” for the sake of the jobless and those out there who are badly in need of a pay rise.

And I reckon all this will be good for stock prices and our super balances.

Go Australia and oh yes, go the Blues!

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