Aussie dollar rise cuts tech goods prices

Colin Brinsden, AAP Economics and Business Correspondent
·3-min read

Consumers could be in for a treat of cheaper mobile phones and computers thanks to the recovery in the Australian dollar from the depths of the coronavirus pandemic.

Australian Bureau of Statistics figures show import prices fell 3.5 per cent in the September quarter led by a 7.2 per cent decline in telecommunications equipment and an 8.7 per cent drop in "office machinery".

The bureau says the cheaper phones are due to delays in new model releases and discounting of older models.

"Cheaper computers reflect a firmer Australian dollar compared with the lows back in March," Commonwealth Securities chief economist Craig James said.

"Consumers will wait and see whether the cheaper prices are passed on by retailers."

However, the rise in the dollar also hit export prices, which fell 5.1 per cent in the quarter. In particular, gas fell almost 40 per cent coal exports were down more than 20 per cent.

The Aussie dollar rebounded to 74 US cents by September after sinking below 60 US cents in March in initial response to the pandemic.

The currency has since eased back towards 70 US cents in reaction to speculation the Reserve Bank of Australia may imminently cut the cash rate.

Economists expect the RBA will cut the cash rate, and other key rates, from 0.25 per cent to 0.1 per cent when its board meets on November 3.

And it's not just the RBA that looks set to provide further stimulus to ensure the economy recovers from its deepest recession since the 1930s.

The federal government may yet have to dig deeper into its pockets.

NAB's latest quarterly business survey shows conditions are improving as the economy opens up from COVID-19 restrictions.

But NAB chief economist Alan Oster says confidence will be a key factor in determining how quickly the country returns to normal.

"Policy support has been crucial for the business sector, and we think the government may need to do more next year unless confidence really rebounds," Mr Oster said.

The survey released on Thursday showed conditions rose 22 points in the quarter to an index of minus four points, while confidence was up five points to an index of minus 10 points.

"Despite the strong gains, both conditions and confidence remain very weak," Mr Oster said.

"While there had been some improvement in activity in the quarter as the economy opened up, the impact on the labour market will lag."

In the past couple of days both Prime Minister Scott Morrison and the RBA have indicated the economy has begun pulling out of the recession.

National Skills Commissioner Adam Boyton told a Senate estimates hearing that while there was a challenge ahead, there were positive signs in the jobs market too.

He said unemployment forecasts by Treasury and the RBA presented a much more positive picture than the ones prepared at the height of the pandemic.

At the same time, the trend in vacancies has been fairly solid during the past few months and in some states they are now higher than they were pre-pandemic.

"One would certainly hope that Victoria will start to join that recovery," Mr Boyton said.

"It will be some months before we know that, but certainly in our monitoring of data, particularly of vacancies, trends are quite positive but aren't going to take us in short order back to where we were."