Lower Aussie dollar soothing some economic sore spots


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05-10-2015 06:27 PM


ABC Canberra 666

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ABC Canberra 666


05-10-2015 06:27 PM



05-10-2015 07:29 PM

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2015-10-05 18:27:02

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TAYLOR, David, (journalist)


JAMES, Craig


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Lower Aussie dollar soothing some economic sore spots -

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TIM PALMER: Well it may have been far from the thoughts of those enjoying a public holiday across much of the country today, but there were some much needed signs of life in the Australian economy today.

The services sector has continued to expand and it seems job seekers were spoilt for choice in September.

But despite the good news, economists aren't prepared to pop any recovery champagne corks and interest rates remain at historic lows to support otherwise weak economic growth.

Here's finance reporter David Taylor.

DAVID TAYLOR: It's fair to say the Australian economy has a few sore spots, but it seems the services sector isn't one of them.

The Australian Industry Group says the sector expanded for a fourth straight month in September.

INNES WILLOX: That's the fourth consecutive month of expansion, the longest consecutive period of expansion since early 2008.

DAVID TAYLOR: Innes Willox is the chief executive of the Australian Industry Group.

INNES WILLOX: To particularly when it comes to the retail sector, personal finance sector, the health sector, the personal services sector more broadly, they seem to do very well, as was transport which came into growth for the first time in quite a long time.

So there were some very positive signs in the economy.

DAVID TAYLOR: Innes Willox says there's more evidence that the new Prime Minister, Malcolm Turnbull, is lifting spirits among businesses in the services sector.

Indeed Mr Willox says there are even some signs of employment growth across the board.

That's also consistent with the latest private sector measure of job ads around the country.

Job advertisements jumped 3.9 per cent in September in seasonally adjusted terms, after rising by a solid 1.3 per cent in August.

Internet job ads were 13.7 per cent higher than a year earlier.

Commsec chief economist, Craig James.

CRAIG JAMES: Well it's a very encouraging result. Job ads up almost 4 per cent in one month, the strongest gain in 15 months. It shows that businesses are getting more confident, they're starting to hire more and more staff and if employment rises then that has huge knock-on effects in terms of multiplying growth across the economy.

DAVID TAYLOR: But all despite the positive signals, few economists are prepared to say the economy has found its feet.

INNES WILLOX: We just need to see how long this can be sustained.

DAVID TAYLOR: The lower Australian dollar has been hailed as a bit of an economic saviour by economists.

It's cushioning the economy and providing some healthy upwards pressure on prices.

Annette Beacher is the chief Asia-Pacific strategist with TD Securities.

ANNETTE BEACHER: The overall message from the September report is that the very, very weak inflation is behind us and we're starting to see a turnaround.

DAVID TAYLOR: In fact according to TD Securities, in the 12 months to September, the inflation rate rose by 1.9 per cent, the highest annual rate since November 2014.

Inflation is one of the "vital signs" for the economy, and shows money is pumping around the system a little firmer.

With the dollar providing further stimulus for the economy, economists say the Reserve Bank can afford to keep the current "cruise control" settings on interest rate policy.

ANNETTE BEACHER: The RBA governor will be very happy that the lower Australian dollar is taking the pressure off interest rates and other sectors of the economy can afford to pick up rather than just housing.

DAVID TAYLOR: The Reserve Bank meets tomorrow at 2:30 eastern to decide on whether or not to lower interest rates further.

TIM PALMER: David Taylor reporting.