The first anniversary of the onslaught of the global financial and economic crisis has been marked by a run of positive economic leads suggesting Australia will be the first stgeloped country to emerge from the downturn.
Private sector surveys for August are pointing to an economy that will soon be “firing on all cylinders”, increasing the likelihood of an interest rate rise in the near term, economists say.
“The risks are looking much more likely that a rate hike is on the horizon in the near term,” said CommSec economist Savanth Sebastian.
“If you look at the data flow, it’s not consistent with where rates are at the moment.”
The debt futures market is now indicating there is a 100 per cent chance of a rise in the three per cent cash interest rate by the Reserve Bank of Australia (RBA) in November.
If that happens, Australia could be the first stgeloped nation to do start lifting rates following the outbreak of the global crisis in September 2008.
A National Australia Bank (NAB) survey released on Tuesday showed business confidence rose to a near six-year high in August, and that conditions for firms had also improved.
The NAB report was the fourth private sector survey for the month of August to signal the economy is on its way to a sustainable recovery.
A Dun & Bradstreet business expectations survey, also released on Tuesday, found firms are becoming optimistic about their trading outlook.
“This is yet more evidence of the important role our economic stimulus is playing in supporting our economy and jobs,” Treasurer Wayne Swan said on Tuesday.
An ANZ job advertisements survey on Monday showed the number of jobs advertised in newspapers and on the internet grew for the first time in 16 months.
And the latest Westpac Melbourne Institute consumer sentiment survey for August was also higher, showing most Australians believe the worst of the downturn is over.
“All the data so far is pointing to an Australian economy that’s holding up very well,” said ICAP economist Adam Carr.
“I think it’s probable that the Australian economy will be firing on all cylinders at the latest by late 2009 and certainly by 2010.
“The fact that the NAB business survey has shown a sharp jump in confidence is material, because business investment is often driven by how confident businesses are.”
Economists believe it’s be fair to assume that bounce in confidence signals businesses are beginning to invest in projects shelved when the downturn began.
“A big concern that has held the Reserve Bank from talking about rate hikes has been business investment figures,” Mr Sebastian said. “They expected them to worsen.”
But Mr Sebastian warned a surging Australian dollar, which on Tuesday was trading around a fresh one-year high of 85.60 US cents, could threaten the nation’s export market.
“It doesn’t hurt the demand side of the equation, but it does hurt the profitability of these companies who report in Australian dollars. I think the RBA will take it into account,” he said.
This week marks a year since the global financial crisis began with the US government takeover of ailing mortgage finance giants Fannie Mae and Freddie Mac.
On September 7, 2008, the Obama administration placed both firms in a “conservatorship” in a bid to avert a financial system meltdown.
Then on September 15, US investment bank Lehman Brothers filed for bankruptcy after merger and rescue talks failed, causing stock markets to plummet.
Those events and others transformed an already difficult situation into a full-blown financial crisis and sent many economies around the world into recession.
But Australia has avoided a similar fate and experienced growth, albeit at low levels, in the first two quarters of 2009, despite a brief contraction in the December quarter of last year.