RA Business Advisors

economy

Market Turmoil Leaves Australia On Top

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Market turmoil leaves Australia on topThe Australian dollar is currently hovering around a 20-month low against the US dollar, and several emerging markets across the globe are experiencing havoc. Yet the Australian economy is showing solid progress.  

According to Commonwealth Bank economist Gareth Aird, “A lower Australian dollar is positive for growth. When it drops and stays lower for longer, that’s when the benefits come through.” 

The global turmoil for the markets is due in large part to the growing trade war between China and the US. The main issues stemming from this are the impact each party’s negotiation tactics have on global investors. US president Donald Trump is well known for making big claims and pulling out late during negotiations, with this putting investors into a head spin.  

Currently, trade figures show goods export volumes lifted 1 per cent and services exports 1.2 per cent in the June quarter. With an expected “very solid” second-quarter GDP, which may come as a surprise given the current dollar. However, as Annette Beacher of TD Securities explains, “normally you would need wages or consumer price inflation to disappoint [for the currency] to be at these levels.” With these unaffected, GDP is expected to be surprisingly positive this coming quarter.  

China’s Caixin manufacturing PMI experienced a slightly bigger-than-expected decline, with Chinese growth continuing to slow overall. Emerging markets such as Argentina and Turkey are also trying to battle inflation and slumps in currency value. Su Lin Ong of the Royal Bank of Canada believes “Leading indicators are telling us that global growth is slowing and the breadth of growth is less. That’s the emerging market linkage to the Australian dollar.” 

In conclusion, it seems that Australia will not be experiencing growth or a boom any time soon, in fact we sit in a similar position to other struggling markets. However, as exterior forces unaffected by the trade war remain steady (wages and consumer price inflation), Australia is expected to come out on top. With the earliest indicator of this set to be the second-quarter GDP data expected on September 6. 

Small Business Booming in the Burbs’

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Small Business Insights

Xero has recently launched Small Business Insights, which provides a monthly snapshot of Australia’s small business sector – courtesy of data aggregated from Xero’s hundreds of thousands of subscribers. Xero has decided to provide these insights with the aim to “help policymakers and large enterprises make more informed decisions that benefit the small business economy” (Xero SBI). On top of metrics that give insights to the small business environment in Australia; KPMG, small business owners, business journalists provide commentary on the small business sector.

small bus

A New Trend

One interesting trend that has been observed by Xero is the increase of small business employment in more suburban locations in major Australian cities. Bernard Salt of KPMG has reported this pattern being evident in Brisbane, as small business employment increased in the period of January – September this year. Nearby CBD suburbs Red Hill (woo!) and Clayfield experienced a 17% increase in small business employment. More suburban areas such as Camp Hill and Bridgeman Downs also had an increase of small business employment, going up 23% & 18% respectively.

This suburban small business employment trend is also replicated in other large Australian cities such as Sydney, Melbourne and Perth. It seems that middle suburbia in Australia is acting as an incubator to nurture new small businesses, says Bernard Salt. It is important to note that whether our economy is performing well or poorly, middle suburbs in our large cities still flourish and experience growth in employment. These small business employment patterns that have been uncovered by Xero’s Small Business Insights give a new perspective on Australia’s modern economy. This pattern provides evidence that small business is as vital as ever to Australia’s economy.

We as small business advisors are excited about these findings, as it displays Australia’s evolving economy – and more importantly outlines the importance of small business to our evolving economy. All information was gathered from the “Small business beats in the heartland” article by Bernard Salt – read the full article here.

small business booming in the burbs

Post Contributor:
Andrés Pascoe