Manufacturing lifts to a three year high

The Australian economy has built up a head of steam in its recovery from last year’s recession, with manufacturers enjoying their best performance in three years.

But such buoyancy will be put to the test in the coming months with the end of the JobKeeper wage subsidy and the demise of the coronavirus JobSeeker dole payment supplement in the past week.

“The challenge over the next couple of months will be to maintain momentum as fiscal support is wound back further and while COVID-19 remains a threat,” Australian Industry Group chief executive Innes Willox said.

The Ai Group’s performance of manufacturing index rose by a further 1.1 points to 59.9 on Thursday, its highest level since March 2018.

It was the index’s sixth consecutive rise and showed the industry was comfortably in expansion territory.

Mr Willox said manufacturing grew across the full range of sectors.

“Employment growth surged with manufacturers’ confidence boosted by buoyant levels of new orders,” he said.

Meanwhile, the housing market continues to heat up. 

National house prices posted the biggest monthly increase in 32 years, rising 2.8 per cent in March, for an annual pace of 6.2 per cent.

The rise in the national CoreLogic home value index was led by a 3.7 per cent increase in Sydney.

The Australian Bureau of Statistics will also release home lending figures for February on Thursday. 

Westpac economists expect a further two per cent increase in mortgages, building on the 10.5 per cent jump in January to a record high.

Financial regulators are keeping a watchful eye on developments in the housing market, but say there is no cause for alarm at this stage.

The housing sector aside, the ABS is cramming in a flurry of other indicators ahead of the Easter break, releasing figures for retail spending, international trade and job vacancies.

For retail trade, economists are largely sticking to the 1.1 per cent decline for February that was recorded in the preliminary result released last month.

Economists expect a trade surplus of $9.5 billion in February, and close to the record $10.1 billion surplus recorded in January.

The ABS will release quarterly job vacancy figures for the three months to February. 

In the three months to November, vacancies leapt 23 per cent, reflecting an easing of COVID restrictions.