CANBERRA, AAP – Manufacturers are enjoying their strongest performance in three years, buoyed by the solid economic recovery from last year’s recession.
The Australian Industry Group performance of manufacturing index grew by a further 3.5 points in February to 58.8, its strongest expansion since March 2018.
Ai Group chief executive Innes Willox said manufacturers lifted production and employment in February as sales recovered a large share of the ground lost in 2020.
“Manufacturers are generally positive about the outlook for the next few months with new orders coming in at a greater pace as restrictions on activity and cross-border travel are hopefully wound back,” Mr Willox said.
The report comes ahead of Wednesday’s national accounts for the December quarter which are expected to show the economy grew by a further 2.4 per cent in the final three months of 2020.
This builds on the huge 3.3 per cent rebound in the previous three months after collapsing seven per cent in the June quarter which marked the first recession since the early 1990’s as a result of the COVID-19 pandemic.
Even so, the Reserve Bank is widely expected to leave the cash rate and other key measures unchanged at a record low 0.1 per cent when its board’s meets on Tuesday.
Australian National University’s Timo Henckel, who chairs its so-called ‘shadow’ RBA board says while the labour market continues to improve, the unwinding of the JobKeeper and JobSeeker assistance in March may well affect employment numbers.
At the same time, he said the second and third waves of COVID-19 continued to dominate the outlook for global growth.
“The rollout of various vaccines is clearly a welcome development but there’s still a way to go,” he said.
The RBA itself does not expect to lift the cash rate until 2024 at the earliest.
Such stability has lifted the financial comfort of Australian households to a record high, despite the negative impact of the pandemic, new research has found.
ME Bank’s latest bi-annual household financial comfort report found improvement in comfort surrounding cash savings, an ability to cope with a financial emergency and investment.
However, a quarter of households said they feel worse about their financial situation in the past 12 months.
ME Bank consulting economist Jeff Oughton attributed the overall positive tone to prudent and resilient household financial behaviours, substantial and extended government income payments, record low borrowing costs and a rebound in share and house prices.
“The pandemic has triggered many households to proactively reorganise their finances, helping to bolster their financial resilience through the pandemic and the uneven economic recovery underway,” he said.