Looking back, 2013 was a period of change and depending on whose side you were on, it looks to have been a change for the better. Australia voted in a change of government which saw the end to a hung parliament. As a result, business confidence has rebounded, with the NAB Monthly Business Survey to Sept 2013 recording a lift in business confidence, rising 17 points above what it was in July, bringing it to the highest level in 3 ½ years. Business conditions are also moderately up, as finance/business/property and construction showed strong gains yet the mining and manufacturing sectors were weak.
It’s hard to truly understand the Australian picture without considering the world economy. 2013 was a year when major typhoons and earthquakes rocked the world and political unrest continues to threaten stability.
Europe continues to present mixed signals though many suggesting the stronger economies there have turned the corner. While the effects of the $360 billion earthquake and tsunami are still shaking Japan, even the economy of the rising sun seems at last to be rising. Of real significance to us is the fact that China’s economy is still strong despite falling slightly to a predicted growth rate of 7.6%, a figure which dwarfs our predicted 2.15% GDP growth for 2013.
So it would appear that concerns over a slow down in China may have been overstated as it is still the major driving force in our region, having significant effect on our mining sector. Despite the recent shutdown and talk of the imminent scaling back of stimulus, the fed’s $85 billion a month purchase of bonds is helping keep the volatile US economy moving forward for now. The manufacturing index rose in September to its highest level since April 2011. Meanwhile, US auto sales and house prices are showing moderate recovery.
Back in Australia, our unemployment rate recovered to 5.6% in September which was welcomed news, while the recent fall in the value of our dollar against the US and other major currencies has proven to be positive for exporters.
With factors including the surge in business confidence together and interest rates being at their lowest level since 1960, the capital city house price index climbed to its highest ever level in September. A growth of 5.8% in building approvals nationwide is of greater relevance for those in the construction industry. Yet despite an increase in demand for credit amongst small to medium sized businesses, banks continue to be looked upon poorly. In the latest survey by independent researcher East & Partners, relationships between smaller businesses with big banks have fallen to record lows.
In terms of property, here are a few highlights:
Looking ahead, here’s a global snapshot, according to the Hon. Joe Hockey’s October Economic Outlook:
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