Friday, May 15, 2009

Might our recession end mere months after starting?

That's the tantilising prospect held out by the latest lending finance figures which, together with retail and employment figures released before the Budget, paint a picture of an economy healthier than had been believed and beginning to recover.

Housing, personal and commercial borrowing jumped 12.9 per cent in March in the third gain in four months.

In trend terms borrowing has been recovering since the December $8.7 billion "cash splash" after sliding for eleven consecutive months...

"While future trends are still uncertain, this is encouraging," said Commonwealth Securities economist Craig James.

Housing lending climbed 7 per cent between February and March with loans to buy new homes and to buy blocks of land climbing to record highs.

"At this rate it won't be long before investors get the message and dive in as well," said Mr James. "The Budget has given first home buyers another three to six months to take advantage of the generous government grants, suggesting the momentum will hold. Home construction will be at the forefront of the recovery."

Commercial finance jumped a seasonally-adjusted $5.2 billion or 20 per cent in March to a five-month high of $30.5 billion, more than reversing a slide of 7.9 per cent the month before.

The figures track those for retail spending, which also jumped strongly with the December cash splash, held on to those gains and then jumped further with the March cash slash to hit a record high.

They are in accord with surprisingly good employment figures released just before the Budget showing that 27,300 Australians found jobs in April, moderating the trend at which the labour market had been deteriorating.

However more-detailed employment figures released yesterday show the long-term unemployment queue is climbing, with the trend number of Australians out of work for more than a year hitting 46,300 in April, around 10,000 more than at the low point in December 2007.

Although early indicators, the figures lend support to forecasts by the Reserve Bank of a recovery later this year, and by the Treasury of a recovery in late 2010.