Following this week’s economic news hasn’t exactly been easy.
On Tuesday, just before that big horse race, we had the RBA essentially telling us that the economy is growing well, and the resources boom is so strong that there was a need to put up rates to tame the inflation beast.
But since then, a slew of data releases have underlined the fact that while the resources sector might be flying, other major parts of the economy are not.
First it was weak data from the manufacturing sector.
Then it was weaker-than-expected retail sales data.
Then we had another fall in housing starts.
Today, we’ve had more data from the construction sector, showing a continuing contraction.
As former Woolworths boss and current RBA board member Roger Corbett says, the economy is looking distinctly “bipolar”.
“It’s immensely important that the fiscal questions of the bipolar economy, in other words the booming conditions in Western Australia and Queensland and difficult situations in some parts of NSW and Victoria, are addressed by the Federal Government,” he said yesterday.
I am not sure exactly what the Government can do, but I do know that smart entrepreneurs who are hunting for growth need to take notice of these comments and pick their growth targets very carefully.
Conditions in some very important sectors of the economy clearly remain patchy. For example, Corbett went on to say he does expect retailers to enjoy a good Christmas, but after this week’s rate rise surely some of the gloss is going to be taken off those sales figures.
Entrepreneurs need to figure out which customers are likely to be doing well, and in which areas, and target those guys for the next few months as they seek to get their 2011 growth push underway.
Careful research and a cautious approach to growth are still the order of the day in the lead up to Christmas.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
