it’s complicated

Australia’ s economic landscape continues to give mixed signals. Not analysis, just brief comments.

Positive

• Capital investment continues to power along : mining + 60% last 12 months; manufacturing +29% last 12 months; other industries + 10% last 12 months. These figures are impressive and should lead to profit and productivity growth over the medium term (2-5 years).
• We’re gradually moving away from an unsustainable consumption and residential property boom to a more  sustainable production and export orientated economy.
• Debt levels of large companies have declined significantly; improving potential financial capacity in the medium term.

Negative

• Employment conditions look set to deteriorate over 2012; with unemployment passing 6% +.
• For whatever reason, people are feeling worse off than they really are. Maybe just a phase!
• In contrast to the big end of town, small and medium enterprises (as a group) haven’t reduced debt levels, increasing vulnerability should a severe domestic downturn develop.