Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)

New figures suggest a strong economic recovery is underway after the set-back of the recent COVID-19 lockdowns, with employment numbers growing and businesses upgrading their investment intentions.

One major bank also expects the impact of having NSW, Victoria and the ACT in lockdown will see a smaller than feared economic contraction when the national accounts for the September quarter are released next week.

Australian Bureau of Statistics data showed payroll jobs continue to recover from the impact of these restrictions, rising 1.4 per cent in the fortnight to October 30 after a 1.7 per cent increase in the first two weeks of the month.

Over 330,000 jobs were lost during the lockdowns, which saw the unemployment rate spike to 5.2 per cent.

But Treasurer Josh Frydenberg said payroll jobs are now 3.9 per cent higher than going into this pandemic.

“Jobs are now higher in every state and territory,” Mr Frydenberg told parliament.

“The Australian economy is on the road to recovery.”

The ABS said also capital expenditure by private businesses dropped 2.2 per cent in the September quarter to $32.7 billion, coinciding with the stiff coronavirus restrictions in the nation’s major states.

It followed three strong quarterly gains.

But businesses now expect to spend $138.6 billion in the 2021/22 financial year, up 8.7 per cent from a previous estimate.

RBC Capital Market chief economist Su-Lin Ong said Thursday’s data suggested a stronger recovery was under way, with “encouraging momentum” and would be welcomed by the Reserve Bank of Australia.

“Stronger business investment is critical to the productivity equation and key in lifting sustainable growth, while the payrolls data will give them confidence in the recovery and progress to full employment,” Ms Ong said.

KPMG chief economist Brendan Rynne said the real challenge wa whether business spending intentions would be realised given current supply chain problems.

“An encouraging sign is that the Baltic Dry Index – the main proxy price for the shipping of raw materials for manufacturing goods – is now down from its peak,” Dr Rynne said.

“This may mean supply chain issues have peaked, although there is still enough uncertainty to impact negatively on companies’ ability to deliver on their stated capex intentions.”

Even so, actual spending by business in September quarter will weigh on the national accounts for the quarter due next Wednesday.

Spending on buildings and structures eased 0.2 per cent in the September quarter to $16.9 billion, while for equipment, plant and machinery it fell 4.1 per cent to $15.8 billion.

Prior to this week’s data, which included a smaller than expected fall in construction in the quarter, economists had expected the economy to have contracted by as much as four per cent.

However, Westpac senior economist Andrew Hanlan now expects a smaller contraction of 2.5 per cent rather than four per cent after the construction figures and in anticipation of better quarterly export figures next week.

“We have also moderated our expected decline in consumer spending, with the Delta lockdown in Victoria seeming to be less disruptive than originally anticipated,” Mr Hanlan said.