Until this month there has been much hand-wringing about the Australian economy – the times however, they are a-changing.
Yesterday the ANZ Job ads data was stronger than forecast and the NAB Business Survey had a big surge confirming the recent data flow from the AiG business indices.
One thing that flows from the pick-up in business confidence and conditions is that, in time, business will start hiring again. It’s just a function of limited human capital on a stock of physical capital that is fixed in the short run.
The higher the capacity utilisation, the more we are likely to see additional units of human capital to get more production.
Writing after the NAB Business Survey yesterday, the ANZ gave the confirmation that we have been waiting for:
Capacity utilisation improved for the third consecutive month and is suggesting that the recent deterioration in labour market conditions are likely to abate in the near term. While it’s premature to suggest that the unemployment rate has peaked, the modest improvement in some non-mining sectors of the economy along with tentative signs that the ANZ Job Ads series has troughed, points to at least a stabilisation in labour market conditions. Forward orders – a leading indicator of demand – rose to the highest level since November 2011, signalling a further improvement in activity going forward.
But as today’s chart of the day shows, as tentative as the recovery might be and as cautious as the ANZ and other commentators are about this potential improvement in the labour market, things seem to be heading toward a much better economic outlook and performance for the Australian economy.
This ANZ Economics and Strategy team under Warren Hogan is really world-class.
Greg is currently in a trading hiatus but you can still follow him on Twitter.