15 April 2016
by Michael Pascoe
No good news please, we’re AustralianWednesday's survey of 1,200 people by the Melbourne Institute and Westpac Bank showed its index of consumer sentiment slipped a seasonally adjusted 3.2 per cent in April.
You don't have to worry about not hearing bad news – you'll certainly be told it. Good news, on the other, can be easily missed. That reality seems to be a factor in consumer confidence turning south again. According to the Westpac/Melbourne Institute consumer sentiment survey, there are now more pessimists than optimists in Australia. Again.
Of course, we journalists like bad news. It scares people into reading and watching us. Vastly more people will click on a headline that says "housing crash" than on one that says "housing stabilising". It's human nature – we stop to gawk at a car crash, not traffic moving smoothly.
So to try to balance the ledger, consider this: despite all the headlines, despite all the doomsday predictions, despite what you're always being told, the Australian economy is actually pretty good.
Today's pleasing jobs growth is the most obvious example – 26,100 on the seasonally adjusted count, 7,100 on the trend series. As decent employment growth numbers started coming through last year, most of the commentariat simply refused to believe it, the Australian Bureau of Statistics had to be totally wrong. The numbers didn't gel with what industry's squeakiest wheels were saying.
The numbers certainly jump around from month to month, but the underlying employment growth is the outworking of what has been quietly happening in business as the weaker dollar, entrepreneurial spirits and the necessity of adaption work their way through the system.
The NAB's monthly business survey on Tuesday showed the business conditions index running nicely above its long-run average, the highest it's been since 2008 – not that many businesses will admit it. NAB believes the non-mining recovery is becoming more broad-based and thinks the Reserve Bank won't need to cut interest rates again in this cycle.
The next day, the ABS February lending finance statistics showed commercial lending surging 5.6 per cent, seasonally adjusted. The longed-for stirring of the animal spirits may be afoot.
Yes, the resources construction boom has come to a thumping end, but that good old indicator of capital city construction – the number of cranes – has soared. The latest RLB Crane Index finds the number of cranes across capital cities up a whopping 20 per cent over the past six months. Since the index started in 2013, cranes are up by 145 per cent.
There are 647 cranes working on construction sites – 288 of them in Sydney, 148 in Melbourne, 104 in Brisbane, with Sydney enjoying the fastest growth in the latest period. And it's early days yet for Sydney's infrastructure boom.
The surge in our service industries is fairly well known now – tourism and education exports are growing very strongly indeed, but that thing you've been told no longer exists, Australian manufacturing, also is stirring.
According to the latest consumer sentiment survey, there are now more pessimists than optimists in Australia.
The Australian Industry Group's performance of manufacturing index came in at 58.1 for March, indicating a strong expansion of manufacturing activity from February. It's the highest level in 12 years and makes it nine months of growth in a row. Yes, Virginia, the Australian dollar in the 70s does pay dividends for our economy.
There are hiccups along the way, but our agricultural industries have improved opportunities through the various free trade agreements. Nothing is served to our farmers on a platter, they have to be world's best to turn the opportunities into dollars and they have to push relentlessly upmarket, but the door is open wider and the good ones are walking through it.
The emerging markets are continuing to emerge, sometimes faster, sometimes slower. And that means more potential customers for our services. There was a big season factor at work with the Chinese New Year, but for the second month in a row, China provided more short-term visitors to Australia than the traditional leader, New Zealand. More than 173,000 visitors from China in a single short month. And it's very early days. There's some simplistic headlining about saying tourism won't "save" Australia. Of course it won't – no one thing will. But if we take the opportunity seriously, gee, would what doubling our tourism infrastructure do for our growth numbers over the next decade?
And talking of infrastructure, this decade's star states, New South Wales and Victoria, are embarking on a virtuous cycle of investment promoting growth that will allow more investment to enable growth.
What our national jobs growth figures mean is more people with more money in their pockets to spend. And while our population growth rate has calmed down, at 1.3 per cent it's still high by developed country standards. How good is it to be in business in a country where, if you do nothing, your potential domestic market grows. How devastating must it be to be in a domestic business in Japan.
We're not there yet, but we're actually in danger of pulling off a magnificent transition from being dependent on resources construction for growth.
But you probably don't want to hear that. No good news, please, we're Australian.