Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
Scott Morrison predicts Australia’s economic recovery will move to a new level in 2021 after emerging from recession last year.
The prime minister’s view came as figures showed new home sales went through the roof in December as Australians clamoured to get the full benefit of the federal government’s HomeBuilder grant.
“There are even better times ahead,” Mr Morrison told reporters at the start of a four-day tour of regional Queensland on Tuesday.
“Our businesses will open up again, even more than they have already, and we will see the comeback that began in 2020 move to a whole new level in 2021.”
New homes sales almost doubled in December compared to November – up by a staggering 91.8 per cent – and the second strongest result in the 20-year history of the Housing Industry Association’s survey.
It was only exceeded by activity in March 2001.
“This surge in sales can be attributed to HomeBuilder as households finalised contracts to build a new home before the December 31, 2020 deadline to access the $25,000 grant,” HIA economist Angela Lillicrap said.
The grant has been extended to March, but at a reduced rate of $15,000.
Over the year new home sales increased by 32.5 per cent compared to 2019.
“This is an exceptional result given the nature of the pandemic and the effect that it has had on the broader economy,” Ms Lillicrap said, releasing the report on Tuesday..
“The strength of new home sales is a positive sign that home building will support jobs on the ground throughout 2021.”
This will be positive news for the construction industry with new figures suggesting this sector has been one of the hardest hit in terms of employment during the COVID-19 pandemic.
Australian Bureau of Statistics data showed construction payroll jobs were 17.8 per cent lower than mid-March when the pandemic first hit.
Economy-wide, the ABS said payroll jobs dropped 5.5 per cent in the fortnight to January 2 and 6.1 per cent since mid-March 2020.
However, the ABS went to great lengths to explain the decline was due to seasonal factors, noting payroll jobs had actually recovered to pre-pandemic levels in the first two weeks of December.
Unlike the monthly labour force figures, the weekly payroll jobs report are not seasonally adjusted.
“So the takeaway from today’s release is probably that the labour market recovery is still ticking along nicely,” RBC Capital Markets strategist Robert Thompson said.
Tuesday’s payroll jobs figures are part of a special series of reports there were introduced to provide a more frequent update on the state of the economy during the pandemic.
Labour force figures for the full month of December are due on Thursday, which economists predict will see a further decline in the unemployment rate to 6.7 per cent from 6.8 per cent.
The recent spate of economic reports suggest the recovery is in full swing, but this has seemingly failed to impress Australians with confidence slipping further in the past week.
The latest weekly ANZ-Roy Morgan consumer confidence index eased 0.2 per cent, its third consecutive fall.
Components of the index – a pointer to future household spending – proved a mixed bag, with confidence surrounding people’s current financial conditions sinking by three per cent.
The “time to buy a major household item” sub-index also dropped 2.4 per cent.
But when respondents were asked about their future financial wellbeing, this sub-index improved 2.4 per cent and remained above the long-run average.