Zenith Finance Blog

The Whole Story

Steady interest rates from RBA don’t tell Australia’s whole economic story

Twice in two months, the RBA has decided to leave interest rates at 4.5%. They’ll usually do this when there’s concern about how our own economy is travelling.

However, the RBA said recently that they expect Australia’s terms of trade to improve by around 20% over the next 12 months. So you might be scratching your head wondering, “What’s the deal with you big bank guys being so nice to us all of a sudden?”

The RBA’s reason for the hold is that growth in many other countries has been very inconsistent, even poor in major economies such as the USA and Europe. They are also a little worried about growth slowing in the Chinese economy.

But as for here at home, things are looking up in a lot of areas:

It’s raining jobs,

Bureau of Statistics figures for May tell us that in Australia:

  • unemployment sits at around 5%, half that of the US and Europe
  • more people found work than retired or dropped out
  • 3% more jobs were advertised than in April
  • 140,000 new jobs created Jan- May
  • a new job was being conjured up every 30 seconds.

Retail therapy hits $20 billion

Despite some views that consumer confidence is down following the interest rate rises earlier this year, retail sales increased last month – as they did the previous two months. Spending $20 billion in one month is nothing to sneeze at. Just ask BP.

Buildings are ‘going up’

As a general rule, when Bob the Builder is busy, we can all feel good about how the economy is placed. The Australian Industry Group and Housing Industry Association says that the number of residential and commercial projects are still increasing.

4th fastest growing property market

With a 20% increase in property investment over the past 12 months, Australia is the fourth fastest growing property market in the developed world, close behind some fairly impressive competition in China, Hong Kong and Singapore.

3 out of 4 businesses looking to grow

The KPMG Annual Private Companies Survey 2010 reveals a huge boost in confidence compared to a year ago. 75% of private businesses surveyed are getting ready to expand, and 96% expect a growth in revenue. This is a huge turnaround from 12 months ago when 30% said they were preparing to downsize and only 2% were looking at growth.

Steady interest rates AND good economic news on the homefront – now that’s something you don’t hear about every day. And now you know why.