James’s Weekly Snapshot - 13 Apr 21
The number of cranes across a city skyline have always been considered a barometer of how the economy is performing.
A lot of cranes often reflects an economy on the move, things are being built, work is being done and the economy is growing.
A new report reveals there were 691 cranes in the sky across Australia at the end of March, compared with 675 at the end of September 2020 – an increase of 2.3%. Brisbane and Melbourne led the charge with an increase of 42% and 9% respectively.
Not bad. The most encouraging sign was that cranes in the sky more or less doubled on education (schools, universities), civil (road, rail) and civic (airport, business parks) projects between September 2020 and March 2021.
The Federal Government committed to spending big on infrastructure to grow Australia out of the COVID-induced recession, and we’re starting to see those projects come to fruition.
We are pleased to see the New Zealand-Australia trans-Tasman bubble has come to fruition.
We talked last week about the fact that New Zealanders comprise the fourth largest migrant population in Australia by number and the significance of the bubble for migration and tourism.
To put it into further context, before the COVID-19 crisis, 7.27 million people travelled between Australia and New Zealand on 47,555 flights each year, making the trans-Tasman route one of the world’s busiest international corridors.
Australia is equally as important to New Zealand it seems, with 1.5 million Australians spending $2.7billion in the country in 2019. Almost as many New Zealanders, 1.3 million, spent $2.6billion in Australia.
During the pandemic less than one million people made the trip in the year to January 2021, as borders closed and airlines slashed flights or stopped flying across the Tasman altogether. In the past couple of weeks flight volumes have tripled and there has been a huge surge in bookings which is an optimistic sign for both countries, and good timing for Aussies as we head into ski season (and Alex plans a New Zealand wedding)!
In other news, the International Monetary Fund produced some interesting numbers during the week. First of all Australia has jumped one place on the ladder of total GDP output, now number 13 in the top 15 countries by GDP output:
When you consider the population of the countries above us on that list, we are one of the most productive countries per capita (i.e. person) in the world! With mining pushing record highs right now, that’s not going to change anytime soon.
Likewise, for a long time we have had one of the lowest debt to GDP ratios in the world. However, that is going to change soon.
The IMF says Australia’s public debt is on track to rise by more than any other developed nation over the three years to 2022.
Australia’s combined state and federal government debts are expected to rise from the equivalent of 47.5 per cent of GDP in 2019 to 77 per cent of GDP in 2022, a bigger increase as a share of national output than any of the 35 major developed nations the IMF tracks.
So, what does it all mean?
The way we have typically dealt with rising debt levels is to push for migration, bringing skilled and cashed up migrants into our country to fill jobs, contribute to the economy and – importantly – increase tax collections. We think as international borders open up there is going to be mutual interest for migration to Australia from people looking to come to a sunny, prosperous and isolated country like ours and our government, which is looking for a way to deal with this massive debt it has necessarily taken on.
with over the coming decade.
With migration comes demand for housing, which bodes well for property owners in the medium to long term.
This next one will take a bit to wrap your head around…
The National Skills Commission has confirmed national job vacancies are at a 12-year high even though the number of people on JobSeeker (i.e. welfare) is 500,000 more than before the arrival of COVID-19.
It’s latest data shows that job vacancies surged by 19 per cent — or 38,200 jobs — to 238,700 in March.
That was more than double the 117,200 recorded a year earlier, and more than triple the roughly 69,000 job vacancies in April.
So how can that be?
Clearly there are green shoots in the economy and certain industries and organisations putting people on. The reason for the differential has to be:
- Timing delay between the jobs being advertised and the recruitment process being finalised.
- A shortage or mismatch between the jobs advertised and the skills of those looking for jobs (i.e. those looking for jobs don’t have the skills required to do the jobs being created)
- A geographical mismatch between job seekers and the jobs themselves (i.e. the jobs are being created different towns and cities to where those looking for jobs currently live).
Our bet is a combination of all the above.
Australia’s number 1 demographer Bernard Salt believes it has more to do with point 2.
Interested in knowing more? Check out the weekly podcast I do with my cousin Alex at The Double Shot Podcast.