A wrap of the Australian economy
The Australian economy remains strong relative to other advanced economies, despite tightening financial conditions as we shift away from the pandemic’s emergency settings and support.
As we move through the last quarter of 2022, headwinds are on the horizon, with recessions looking likely in advanced economies overseas in 2023. Australia is set to fare better than most, however, we have an open economy that is impacted by events on the global stage.
Five updates for Australian businesses
1. The labour market
The Australian labour market remains tight, with unemployment at 3.5%, its lowest in almost 50 years. Hiring demand is strong, and business leaders are continuing to find it difficult to secure new talent.
In this environment, we see growth-focused businesses attending to the core features of their employee experience to attract and retain talented people, and remain competitive. This includes their hybrid working arrangements, salary packages, culture and employee development strategies.
In the new year, it’s likely the story will change for the labour market, as the economy starts facing growth constraints.
"In a forward-looking sense there’s a couple of things that will determine how easy it is to get labour,” says Senior Australian Economist at Macquarie Group, Justin Fabo. “The first one is the borders reopening, and a pickup in population growth, that will help in terms of the availability of labour.”
“The second one is probably less favourable. We are expecting a decline in demand growth in the economy, and an increase in unemployment. That’ll make it easier to get staff, but the bigger issue for businesses will be slower growth in demand.”