RBA reveals the Aussies about to suffer amid economic recovery

(Source: Getty, AAP)
(Source: Getty, AAP)

Although the national economy is beginning to show signs of recovery, some Australian workers who were doing comparatively well during the peak of the crisis will soon find themselves out of work, the Reserve Bank’s governor has said.

In a speech to the Anika Foundation yesterday, RBA governor Philip Lowe noted that the economy had “turned the corner,” with the number of employed Australians rising by 210,000 and numbers of hours worked increasing in June.

“Many firms that were heavily affected by the shutdowns are now rehiring and lifting hours as the restrictions are eased in most of the country,” he said.

But on the flip side, some sectors are now facing headwinds.

“Through our business liaison we are hearing that many firms, including in the construction sector and in professional services, were able to keep many of their employees over recent months because they had a pipeline of work to complete.

“But as new orders have declined, this pipeline is drying up,” said Lowe.

“If it is not replaced soon, hours worked in these businesses will decline further, just at the same time that other parts of the economy are coming back to life.”

Denita Wawn, the chief executive of building and construction industry group Master Builders Australia, said it was the industry most reliant on JobKeeper.

“There’s no doubt that JobKeeper continues to be a lifeline for thousands of small builders and tradies as well as many in the building supply chain,” she said.

“But many small builders and tradies still face an extremely tough 12 months at least, which is reflected in forecasts of a major contraction in demand.”

The government’s various stimulus packages will help support jobs and businesses as well as keep apprentices in work, she said.

But there will be no point if there is no work for the industry, she added.

“While there is no question as to the effectiveness of JobKeeper, and JobTrainer a pipeline of work is essential to the recovery of the industry and the economy

“As the Government recognises, the massive contraction in demand that we are experiencing is due to the restrictions on economic activity imposed to save lives.”

Stimulus measures like HomeBuilder, which creates work for the building and construction sector as well as secondary jobs, would be more effective in bolstering recovery, Wawn said.

Realestate.com.au chief economist Nerida Conisbee said major construction projects can take many years to complete.

“So a new apartment building being built now was probably in the planning stages in 2017 or 2018. For major rail infrastructure projects, it would be even longer,” she told Yahoo Finance.

“For now, this means that the construction sector is being supported by what was planned several years ago. The issue now is that there are fewer projects being started up – it has a limited impact now but will have a bigger impact in the coming years.”

AMP Capital chief economist Shane Oliver said approvals to build non-residential buildings have fallen for four months in a row.

“The boost provided by the Federal Government’s HomeBuilder scheme will help but won’t fully offset the collapse in demand for housing flowing from the collapse in immigration,” he told Yahoo Finance.

“So in terms of construction I would agree with Governor Lowe’s assessment that there is a threat to hours worked and employment in that sector.”

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