When an economy turns upwards, the first sign usually comes from the stock market, which rallies strongly. Then you see a series of anecdotal signs before all the figures come together and there is a lift in overall growth rates.
That gives the economists who predicted the rise the chance to do a bit of self-congratulation.
We are now very much into the second or anecdotal phase. Nothing underlines this better than an email I received this morning from the international accountancy recruitment firm Robert Walters.
Walters is confined in Australia to Sydney and Brisbane, but the firm reports that in Sydney during the three months to September there has been a big rise in accountancy job volumes, while in Brisbane there is a substantial shortage of accountants to fill the vacancies. Those trends in Sydney and Brisbane are being mirrored in Melbourne and other capitals.
When demand for accountants surges it means businesses and governments are doing things and preparing for better times.
Another anecdotal sign is the advertising market. During the election, political party advertising dominated the market, but we are now seeing a broad surge in advertising and, I am pleased to say, websites such as Business Spectator are enjoying the upward swing.
We are in the peak home-selling season and prices are holding well in most areas; in some places prices are heading even higher. This underpins community confidence. This is in stark contrast to the US (and many parts of Europe), where confidence is being sapped by problems in the housing market.
There will be plenty of other anecdotal evidence. One area that is finding it tough is retail. People with big home mortgages are facing a cash squeeze with higher interest rates, power and water charges. They are also spending more on telecommunications. As a result, in the retail space many are buying lower-priced goods. But the overall prosperity and the higher Australian dollar are helping many retailers.
There will obviously be some problems stemming from the higher dollar in areas such as tourism and education. But that will be more than offset by the huge mining investment that is proposed. We do not have the skilled labour required to build these projects in Australia. Massive numbers of guest welders and other skilled people will be required.
All this means that over the next six months interest rates are going to rise. What can go wrong?
Lots, but it all gets down to one word – China.
This article first appeared on Business Spectator
Smart Company is the leading online publication in Australia for free news, information and resources catering to Australia’s entrepreneurs, small and medium business owners and business managers.
