Current Economic Conditions

Dec 13 2010 / 5:09 am Was written by Atwell & Co. Comments Off

The Australian economy continues to perform relatively well given the performance of other western economies. Though increasing slightly in October, the Australian labour force continues to remain strong and will continue to perform throughout the upcoming holiday season.

Australia’s unemployment rate for October 2010 has increased to 5.4 per cent, which was a complete surprise to most analysts. Despite the creation of over 29,000 jobs for the month, unemployment still increased, mainly due to the large increase in the number of people looking for work as the participation rate surged to a record high 65.9 per cent. Victorian unemployment also increased during October, increasing to 5.6 per cent, with the participation rate also increasing to 65.9 per cent from last month’s 65.7 per cent.

National retail turnover decreased by 1.1 per cent for the month of October in seasonally adjusted terms, the first decrease in eight months. Victorian turnover also decreased for the month, falling by 0.7 per cent, following last month’s 0.7 per cent increase. In trend terms the Victorian retail sector posted modest growth of 0.3 per cent for the month, while national retail turnover remained unchanged. Though the recovery in the retail sector has not been very consistent, the recent strength of the Australian dollar should help retailers discount products for the upcoming holiday season, leading to an increase in consumer spending.

An increase in the November cash rate and the excess increases in mortgage rates by the big four banks are the reasons behind the decrease in consumer sentiment for the month of November. The Westpac – Melbourne Institute Consumer Sentiment Index decreased by 5.3 per cent to 110.7 in seasonally adjusted terms, following a 3.4 per cent increase last month. The current conditions index decreased by 5.1 per cent, while the expectations index decreased by 5.5 per cent for the month. The main decreases in sentiment were in the component indices about economic conditions next 12 months and next five years as well as in the component index reflecting family finances vs. a year ago.

Scource – Real Estate Institute of Victoria

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