THE Hunter Research Foundation Centre’s quarterly economic indicators have become a key tool in measuring change over the years in the region’s economy.
While there is reason to caution against placing too much emphasis on any one set of figures, the longer term trends that become apparent from looking at a particular measure over time can show – quite accurately – where we have been, and where we are headed, when it comes to the major drivers of economic growth.
The first thing to notice about this overview of the December quarter is that all of the major measures are either good, or heading in the right direction, or both.
Nationally, the research centre says the economy expanded in the December quarter after a contraction in the first three months of the 2016-17 financial year.
In the Hunter, it was a case of positive trends continuing, with employment, house prices, business outlook and consumer confidence all on the march. Much of the jobs growth is in full-time employment. Unemployment – very pleasingly – is below the state average. The pipeline of construction projects is varied and robust.
Business confidence is upbeat, consumer activity has taken a turn for the better and the overall regional outlook is one of renewed confidence.
As has been the case for some time, much of the employment growth is in the services sector, with manufacturing continuing to lose ground in relative terms. Advocates of the new economy see the demise of manufacturing as a sign of progress, but it is worth remembering that Australia already has one of the lowest rates of manufacturing in the developed world, contributing just 7 per cent to the nation’s gross domestic product. In the United States, the figure, while also falling, is still 12 per cent. In high-wage Germany, by contrast, manufacturing accounts for 30 per cent of GDP, with no real sign of decline.
With this in mind, we should acknowledge the role that coal still plays in this economy, even if its critics would wish it gone forever, replaced by solar and wind power backed by beds of batteries. Coal prices all but doubled last year, sustaining jobs and pouring more royalties and taxes into government coffers. Yes, it has its impacts, but it puts a foundation under this economy that we may find difficult to replace.
We should be careful what we wish for.