More evidence today that the economy is far stronger than even the Tuesday night’s budget papers revealed and that the billions of dollars in cost of living ‘payments (vote for us bribes?) in the budget are too short term and could add to price pressures being felt by businesses and consumers.
In short, the story from a trio of releases from the Australian Bureau of Statistics on Thursday is that the economy is booming and tipping billions of short term stimulus from the ‘cost of living assistance’ could send demand higher, at a cost of higher and more sustained levels of inflation.
Australian Bureau of Statistics building approvals figures yesterday approvals rose sharply in February after January’s surprise fall and job vacancies continue to rise strongly (as the jobless rate falls to all-time lows) and retail sales are also running close to record highs in February.
But prices remain a big concern – an ABS survey of business showed 97% expected price rises and 39% planned a larger than normal rise in their prices in the next few months – confirmation that cost pressures are now endemic.
Most of these are non-staff related expenses such as fuel and energy and the cost of products used by the business.
The ABS said the total number of dwellings approved rose 43.5% seasonally adjusted in February, more than reversing January’s 27.1% slump as approvals of new apartments, units and townhouses soared more than 70% in the month and more than a dozen major public housing projects were confirmed.
Daniel Rossi, ABS Director of Construction Statistics, said: “The large rise in the total number of dwellings approved in February was recorded across all dwelling types.”
“Private sector dwellings excluding houses, rose 78.3 per cent, following a 43.3 per cent fall in January. The rise in February was driven by a large increase in apartment approvals in New South Wales and Victoria. Private house approvals also rose in February (16.5 per cent), following a 16.3 per cent decline in January.”
The value of total building approved rose 67.5% in February, in seasonally adjusted terms. The value of non-residential building increased sharply (132%), following a 37.2 per cent fall in January.
The ABS said the February result was the second highest recorded (behind March 2021) and was driven by a large number of public developments, with 14 projects valued over $30 million given the greenlight.
The value of total residential building jumped 38.7%, with a 47.7% increase in the value of new residential building, and a 6.4% fall in alterations and additions for the second month in a row).
And the ABS said job vacancies hit record highs in the three months to February as the jobless rate hit an equal all-time low of 4%.
This is a key measure of the health of the jobs market and it is clear the pandemic has not left lasting scars on demand for labour, despite the surges and falls in activity and jobs in the various lockdowns.
There were 423,000 job vacancies in February 2022, 27,000 more than November 2021 and around 200,000 more than February 2020 at the start of the pandemic, according to the ABS.
Bjorn Jarvis, head of Labour Statistics at the ABS, said “The number of job vacancies in February 2022 was 7 per cent higher than in November 2021, when many businesses were emerging from the Delta lockdowns. There were around an extra 200,000 job vacancies than in February 2020 – around 86 per cent higher.
“The high number of vacancies shows the strong demand for workers across the economy, as businesses are responding to disruptions to operations, together with labour shortages across the economy.”
“In addition to a higher number of vacancies, the percentage of businesses reporting at least one vacancy also rose, from 21 per cent in November 2021 to 24 per cent in February 2022. This was more than double February 2020 (11 per cent),” Mr Jarvis said.
“Job vacancies were much higher than before the pandemic in all industries, with many businesses continuing to report difficulties in filling their vacancies.”
And then there’s the survey of business expectations and in a way it both confirms the boom and is a major warning about cost pressures coming down the track.
The ABS said 39% of all businesses expect to increase their prices more than usual over coming months, with a majority of retailers expecting larger than normal price rises.
ABS Head of Industry Statistics, John Shepherd, said: “By industry, results showed 59 per cent of Retail trade businesses expect their prices to increase more than normal over the next three months. The Construction (58 per cent) and Manufacturing (55 per cent) industries were the next most likely to expect price increases.”
Apart from the pressure on prices caused by fuel and supplies, 47% of large businesses reported wage pressures which was surprisingly much larger than among small businesses with just 28% were concerned about higher wage costs.
Businesses continue to report supply chain disruptions with 41% suffering issues in March. This is up from 37% in February but down on the 47% in January.
