February 17, 2021

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

New figures show Australia looks set for solid economic growth in coming months, with unemployment falling further as jobs vacancies surged to an 18-month high.

Scott Morrison says the recovery from last year’s recession continues to gather momentum and confidence is being restored.

“That confidence will be further reinforced by the rollout of the vaccination program,” the prime minister told parliament on Wednesday.

The rollout of the COVID-19 vaccine begins on Monday with border and healthcare workers and aged care residents and staff getting the first jabs.

Ahead of Thursday’s crucial monthly labour force data, the National Skills Commission’s vacancy report showed jobs advertised on the internet rose by a further 1.6 per cent in January to an annual rate of 11.1 per cent.

This was the ninth consecutive monthly increase after diving to a record low last April when the country entered recession.

“Job vacancies now stand at 18-month highs, pointing to further falls ahead for the jobless rate,” Commonwealth Securities chief economist Craig James said.

Economists expect Thursday’s jobs report will show the unemployment rate fell to 6.5 per cent in January from 6.6 per cent previously.

“Some industries and individuals may face challenges, but the bulk of the workforce are back at their workstations,” Mr James said.

He said the JobKeeper wage subsidy introduced during the depths of the recession is due to end in March, but “it is a bandaid worth removing”.

At the same time, the Westpac-Melbourne Institute leading index, which indicates the likely pace of economic activity three to nine months into the future, continues to point to growth above the long-term trend rate of around 2.75 per cent.

Westpac economists are predicting a solid growth rate of four per cent in 2021, led by consumer spending.

“With the unemployment rate falling and consumer sentiment currently near a 10-year high the consumer is expected to compensate for the likely impact on incomes from the winding down in a number of the federal government income support programs,” Westpac chief economist Bill Evans said.

“This growth profile is dependent on Australia’s continued success in managing the pandemic locally.”

However, the chief executive of accounting body CPA Australia Andrew Hunter doesn’t believe businesses can continue to absorb loses created by snap lockdowns and border closures to deal with the impact of COVID-19.

“JobKeeper ends next month and we still don’t have a substitute for businesses that are compulsorily closed or those otherwise impacted by lockdowns, such as suppliers and customers outside the lockdown areas,” he said in a statement.

CPA Australia is calling on federal, state and territory governments to work together to develop and deliver financial support to businesses severely impacted by lockdowns.

“Sympathy won’t pay for spoilt produce, cancelled bookings and empty chairs at empty tables,” Mr Hunter said.

“Businesses need more certainty – they need a coordinated national response that will deliver help fast when the next lockdown occurs.”