At our latest economic event, Catherine Birch, Senior Economist at ANZ, led an insightful conversation on the current economic outlook and an update on the labour market. With a focus on Victoria, mentions of other states in comparison, and Australia as a nation, Catherine initially gave us an overview of the broader economy, before focusing in on the general labour market, and finishing with sector-specific insights.
The Broader Economy
- Surprisingly, there has been very little structural damage to the economy, with many households and businesses having built savings “buffers” from consistent waves of lock downs. This has led to a rise in consumer confidence.
- Now is the time that many businesses are willing to take higher risks on their balance sheets and try new, innovative tactics towards growth.
- Food prices are rising globally, but Australia to a lesser extent because we produce many of our own foods.
- Because of restrictions, many people were able to save around 20% of their income, which many used to pay down debt or put money into offset accounts.
Victoria Specific Insights
- Housing prices in Victoria are up 14-17%, and could rise more than 20% before the end of 2021. However, gains should moderate in 2022.
- Victoria benefits from its industry composition, with many people working in industries that allow them to work from home.
- Interstate migration into Queensland from Victoria has increased, with Victoria’s population dropping by 6.8% as a result.
General Labour Market
- Low income workers have suffered the most, while higher income groups have maintained, and even grown their earnings in many instances.
- Rates of resignation in the US are very high, but that does not seem to be the case in Australia yet.
- Employers are increasingly looking to hire people with soft skills such as leadership, commercial strategic thinking, systems improvement and resilience.
- The impact of COVID-19 has been inconsistent across industries, with the arts, tourism and hospitality sectors taking the biggest hits (down by 25%).
- Professional and administrative services, where employees are able to work from home, have grown by nearly 10%.
- Employment has risen in some key finance occupations but online job ads data suggest this has come with fewer new opportunities.
- Senior positions are not being advertised because they are instead being filled through existing networks. Lock downs have made networking very difficult, especially for those without established networks.
What to expect for post-lockdown into 2022
With most of the nation free from lock downs, a spendathon is predicted similar to levels previously seen in the 1920’s, with consumers spending on both goods and services. There will be a spike in spending on personal services, such as hair and nails, with dining and takeaway to follow. There will also be a possibility of shorter, temporary, and localised restrictions being introduced based on case numbers.
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