As Victoria follows NSW into yet another lockdown, the V-shaped recovery is looking a little wobbly, but Bendigo Bank economist David Robertson has given the territory a cautious thumbs-up.
The latest round of quarterly economic data for the ACT is a mix of results, showing Canberrans are utilising government stimulus measures to improve their stay-at-home life while the capital’s property prices creep ever higher.
“There is no doubt these latest lockdowns will affect the recovery,” David said.
“We had record GDP growth last year, Australia was rebounding from the recession, but now suddenly we are back talking about lockdowns and vaccination rates again.
“The lockdowns in Sydney and Melbourne will definitely have an impact on the rest of Australia. Closed borders heavily affect tourism and economic activity generally.”
David says this will likely show up as a pause in the economy and affect the growth in jobs.
National jobs data out for June showed unemployment falling to 4.9 per cent, the lowest in 10 years, but the ACT data showed a surprising variation.
The ACT unemployment rate was 4.9 per cent, up from 3.6 per cent in one month. But David cautions this may be a one-off read.
“We need a few more months to see the trend. The 4.9 per cent figure coincided with a fall of 6,000 jobs. At this stage, it is unclear what caused the increase, and it is a small sample size, but it is disappointing,” David explained.
“Pleasingly underemployment, the number that picks up part-time workers, fell to 5.6 per cent, way ahead of the national figure of 7.9 per cent, noting the national figure includes Victoria in lockdown during this sample.”
Retail sales are strong in the ACT, rising 0.9 per cent in May alone. Interestingly, since the pandemic, Canberrans are increasingly buying more goods than services. Retail sales are 7 per cent higher than previous levels.
“Food sales were up in May, which means we are cooking at home more, and we are spending more on household items and home improvements. This fits with the intention of the government stimulus measures,” David explained.
Economic growth for the ACT is up at 3 per cent gross state product, coming off 2.5 per cent, showing good year-on-year growth despite the recession. The public sector remains resilient, as is healthcare, education, training and professional services.
“The outlook for growth will directly correlate with growth in vaccination rates, but overall we are expecting growth for the ACT post-recession of around 3 per cent.”
Turning to property, residential sales remain strong. According to Core Logic data, average dwelling prices are up 18 per cent for the financial year in the ACT.
House prices are up 20 per cent while units are up 8.7 per cent. The median house price is now $770,000. Rental yields are up 8 per cent for houses and 5.5 per cent for units.
“These figures point to challenges ahead. The lack of supply is an issue for buyers and renters,” David said.
Residential construction work is up 6.7 per cent for the quarter but at 5 per cent over the year. Nationally construction is up 5.1 per cent for the quarter.
“The ACT has caught up a bit but is still lagging the national trend; HomeBuilder has helped here.
“There are some good results for the ACT economy, but obviously, housing and employment are two challenges ahead. Recovery is now all about vaccination rates. Until we reach a vaccination rate around 80 per cent, vaccinations outbreaks and snap lockdowns will continue to feed into the economy in the new financial year.”