IN CASE you missed the lead story in last Friday’s Financial Review … the Treasury secretary (Martin Parkinson) was outspokenly critical of the government’s recent handouts to the car industry.
And more particularly, given the recent strong growth in the unemployment figures.
In his view, taxpayers ought not be subsidising so-called “strategic industries” — when these represent inevitable structural changes, which need to occur in order to make Australia more productive in the long-term.
David Gruen (another senior Treasury official) went on to say:
The pain of job losses is real and there is a lot of change that’s happening within the economy. [But] it’s much better this happen during a time of full employment of 5 per cent, than during the depths of a recession.
And the Treasury is not alone …
The RBA showed support for the underlying health of the Australian economy, by leaving the cash rate on hold at its last meeting.
And this was reinforced by Wayne Swan in a recent interview with the Fin Review — where he said that the creation of 46,000 jobs last month was a “really timely reminder that our economic fundamentals are rock-solid.”
Clearly, a message I have attempted to convey in these weekly articles, for some time now.
Positive Changes are Everywhere
The reality is there are more people currently employed within the health and welfare services industry, than in any other segment of the economy. To the point where the total services sector accounts for around 80% of the Australian employment scene.
And this is good news for Commercial investors, because these growing numbers all need to be accommodated.
The US is also enjoying its lowest unemployment claims for almost 4 years. And it’s housing starts were up 1.5% during January, reflecting a 699,000 annual rate.
Likewise, relative calm in Europe comes as a welcome relief — but is no reason for complacency.
Nonetheless, Spain’s new government has already made radical changes. Ireland seems to be back on a stable footing. An Italy is implementing the necessary structural adjustments, with strong public support.
Bottom Line: The evidence supporting Australia’s underlying stability is mounting up — both factual and anecdotal. Plus, all those funds consumers have ‘squirrelled’ away will only remain ‘frozen’ for so long.
And the ever-growing services sector will provide solid demand for Office space — both within the CBD and the inner suburbs. So this is where you need to be focusing, as a Commercial property investor.
But the secret is in knowing … exactly where to buy and … how long to hold onto it for!