Region's Job Rate Healthy: Expert
Illawarra Mercury
Friday May 30, 2003
THE Illawarra economy would remain healthy with a steady growth in employment, solid consumer spending, increased commercial development and a buoyant housing market.
That was the underlying message of an address to the Illawarra business community by Commonwealth Bank senior economist Michael Workman.
Speaking at a regional business forum Mr Workman suggested the region's unemployment rate was more like 8.5 per cent than the 12 per cent plus suggested by the Australian Bureau of Statistics, because job advertising was at a 20-year high and a solid growth in service-related employment.
Low interest rates combined with relatively low unemployment had increased the spending power in the Illawarra economy. Significant increases in the value of residential property had dramatically increased household wealth.
More wealth translated into even greater spending power and a vibrant retail sector and business community.
Mr Workman predicted Illawarra house prices would continue to rise because of continued low interest rates. He said consumers were expected to keep spending.
``People are using high house prices here as the basis for why they are spending so strongly," he said.
``But there is also good employment growth and that is what matters."
Mr Workman predicted low interest rates, possibly with a rate cut later this year, for another nine to 12 months and a further reduction in fuel prices by as much as 10 a litre.
A decline in housing construction was expected but existing house prices would continue to rise.
He predicted the Australian dollar exchange rate would rise to US70 and that would cause pain for exporters in industrial and rural sectors. Insurance premiums were also expected to keep rising.
Low interest rates would also fuel a growth in commercial construction activity and developers were likely to continue to invest in unit developments in the Illawarra.
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© 2003 Illawarra Mercury