Reserve Bank governor Philip Lowe has noted a key aspect of business data as being “good news for the economy”, with positive conditions expected to continue.
Speaking at the Australian Business Economists’ Annual Dinner in Sydney last week, the governor of the central bank said that the outlook for business investment has brightened.
“For a number of years, we were repeatedly disappointed that non-mining business investment was not picking up,” said Mr Lowe.
“Part of the explanation was the negative spillover effects that I just spoke about, although, as my colleague Guy Debelle spoke about last week, there were other factors at work as well.”
Mr Debelle told delegates at the UBS Australasia Conference a week earlier that the availability of finance had been a growth constraint for SMEs.
However, the RBA believes that “a gentle upswing” in business investment does seem to be taking place, with forward indicators suggesting that this will continue.
“It’s too early to say that animal spirits have returned with gusto,” Mr Lowe said.
“But more firms are reporting that economic conditions have improved and more are now prepared to take a risk and invest in new assets. This is good news for the economy.”
The improvement in the business environment is also reflected in a strong employment growth.
Mr Lowe observed that over the past year, the number of people with jobs increased by around 3 per cent – the fastest rate of increase in 10 years.
“This pick-up in jobs is evident across the country and has been strongest in the household services and construction industries. It is also leading to a pick-up in labour force participation, especially for women,” he said.