The ACT economy
After mixed results in recent years, the Australian Capital Territory (ACT) economy now appears to be in a good position. The latest quarterly business outlook report by Deloitte has found that the ACT economy is looking stronger - pointing to the housing, construction and the public sector as areas that are performing well and boosting the economy1.
Higher levels of consumer and business confidence are also factors behind the positive outlook. This consumer confidence can be seen in a report out this week from Australia Post, which shows the growth in online shopping grew by 13.4% in the ACT, compared to a national growth rate of 11.5%2. These figures tend to reflect local economic conditions, as Western Australia for example, only grew by 4.6% - the slowest growth in the country - echoing the impact of the wind back in the mining sector3.
While the increase in housing prices, solid jobs growth and boost in small business confidence is good for Canberrans, there is still need for caution
The ACT has its own unique benefits and challenges. A big factor is that over 30% of ACT jobs are in the public sector4. This means, decisions to cut spending on government are felt more sharply than in other parts of the country - as it impacts more local people. Many of us will have seen or felt the impact of past public service job cuts, hiring or wage freezes.
There’s also several large-scale construction projects underway in the ACT, which are boosting employment and jobs growth – including the Light Rail Network, ANU’s $220 million Union Court revamp and the $300 million Canberra casino redevelopment. While some of these local infrastructure projects are currently providing us with stimulus, planning beyond these projects is also needed, so that the pipeline continues to drive future economic growth. Of the $75 billion set aside in this year’s Federal Budget for infrastructure projects in the next 10 years, only 0.4% is allocated for projects in the ACT5.
The ACT housing market has also contributed to the strength of the economy. Median house prices increased 10% for the year to May 2017, while median unit prices have stayed largely flat6. Over the longer term, these increases have been more measured compared to what we have seen in some other markets, but still commendable. For instance, Sydney and Melbourne median residential property prices increased 70.3% and 40% respectively over the past five years – while here in the ACT, they increased by 15%7.
As a local Canberran it’s good to see these positive factors for the ACT. On 666 ABC Radio Canberra, I enjoy giving regular updates on topics like this and other business and finance news; on everything from, analysing local markets, to what’s happening abroad and how that impacts our economy. It’s been nice to hear some of you have been listening and I’ve appreciated all your stories, comments and feedback.
This insight may contain general financial advice and was prepared without taking into account your objectives, financial situation or needs. Before acting on any advice, you should consider whether the advice is appropriate to you. Seeking professional personal advice is always highly recommended. Any forward looking statements are based on current expectations at the time of writing. No assurance can be given that such expectations will prove to be correct.