SYDNEY, June 28 (Reuters) – A year after the coronavirus pandemic hit Australia’s economy, IT entrepreneur Ashok Ravindran has a big problem: deciding which of the three job offers to accept.
Its happy dilemma reflects an economy that is now larger than its pre-pandemic level. Exports are booming, consumer and business confidence is high and employment has exceeded all expectations, with job vacancy rates at a 12 1/2 year high.
The Sydney resident quit his last job just two weeks ago.
“The market is very hot right now. I tried a few companies just to test the waters and got three offers,” Ravindran told Reuters. “I got counter offers from all of them. It made it harder to say no because you don’t want to burn your bridges.”
A far cry from last year’s dire predictions, Australia’s unemployment rate has dropped to a pre-pandemic level of 5.1%, home building approvals are at an all-time high and consumer spending is euphoric. Read more
The A $ 2 trillion ($ 1.5 trillion) economy is now larger than before the once-in-a-century pandemic hit its shores. Sporting events are once again a major spectacle and pubs are teeming with customers. In many states and territories, masks are a rare sight.
On the contrary, the very constraints that were expected to hamper demand, such as closed international borders and limited internal mobility, accidentally funneled new sources of growth.
Instead of traveling to Bali or Bangkok, Australians go on vacation locally. The demands of working from home have prompted many people to move to new residences outside of big cities, supporting demand in smaller towns. Physical distancing rules have boosted online retail sales, while restaurants have never been more popular.
“Australia is breaking records in what has to be one of the fastest economic recoveries in modern history,” said Dermot Ryan, Australian equity portfolio manager for AMP Capital.
“The economy is riding the wave of a triple boom in mining, housing and corporate profitability.”
As the country is in the midst of a worsening trade war with China, the world’s largest trading nation, Australian exports are miraculously booming, thanks to soaring iron ore prices and new developments. Asian and Middle Eastern markets to sell to. Read more
Economists expect this golden race to continue.
Australia’s rapid economic recovery from its first recession in three decades in 2020 is due to its ability to largely reopen coronavirus lockdowns earlier than expected and strong monetary and fiscal stimulus.
The combination sparked a real estate bull run, freeing up a huge amount of capital that was cautiously withheld by banks in 2020 in the event of a COVID-induced real estate crash.
AMP’s Ryan said the mining and banking sectors have the potential to bring in over A $ 50 billion each to investors in the next fiscal year.
Soaring home prices triggered a construction boom, sending shares of construction product manufacturers such as James Hardie (JHX.AX) and Brickworks (BKW.AX) to record highs. Shares of Australia’s largest mortgage lender, the Commonwealth Bank (CBA.AX), hit all-time highs after ceremoniously surpassing A $ 100 on May 28.
In another sign of a solid recovery in business, the CBA said this month that its financing of light commercial vehicles had increased 187% since January of last year, while loans for equipment and machinery jumped by 21% in May, compared to the same period last year.
Consumers, too, feel confident, with poll results consistently showing optimists outnumber pessimists. Read more
Retail sales have jumped 25% from a year ago and vehicle sales are up 68%. Retailing of household items has exploded, led by appliances and furniture as people renovate or build new homes.
Demand is so great that home supplies and the Bunnings hardware chain are now facing a shortage of lumber.
Businesses are also facing a labor shortage with tens of thousands of Australian citizens still stranded abroad.
Their fate hangs in the balance as Australia pledges to keep borders closed until next year, which also means skilled migration – which propelled the economy through 2019 – is virtually impossible.
The move to keep the borders closed is popular with the general public, with recent state elections showing that leaders who take a tough stance on COVID are heavily favored.
Strict border controls, slower interstate migration, and strong business confidence and profitability have all helped to tighten the labor market, with sectors such as IT, engineering, hospitality and healthcare making the cut. facing serious shortages.
This has frustrated companies who are calling for a relaxation of border restrictions.
“The current framework of the international border is virtually zero entry and exit,” said Innes Willox, managing director of the Australian employers’ association Ai Group.
“This must give way to a more sensible stance and a much more ambitious border opening target than the July 2022 target currently adopted by the federal government,” added Willox.
“Our critical skills shortages will only worsen as our border remains closed.”
For people like Ravindran, however, there has never been a better time to look for work. “I am confident that my contract will be renewed when it is renewed. There is sufficient demand at the moment.”
($ 1 = AU $ 1.3160)
Reporting by Swati Pandey; Editing by Sam Holmes and Simon Cameron-Moore
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