Malcolm Turnbull probably couldn’t have picked a better time to challenge Tony Abbott for leadership of the Liberal party and thus the job of Prime Minister.
That’s because even though the data for June quarter GDP printed an anaemic growth rate of just 0.2% dropping the annual growth rate to 2% signs are emerging that in the months since the lower Australian dollar is starting to give the economy a real boost.
Data released this week showed that Australia’s services sector expanded for the 4th month in a row during September according to the AiGroup PSI. That’s the “longest period of continuous expansion since March 2008.” Before the GFC!!!
Likewise, manufacturing in Australia expanded for a third month in row during September which is the first time this has occurred since July 2010. Indeed, manufacturing is doing so well “Six of the seven activity sub-indexes expanded in September.”
Both these outcomes, of business strength not weakness, gel with the message from the NAB business survey which is that business conditions of 10.7 are much stronger than the post GFC average of just 0.3.
Whether it’s the Reserve Bank, the NAB or the AiGroup the resurgence in Australian business at the moment is in large part a result of the big fall in the Aussie dollar.
That gives the confidence boost that PM Turnbull, and the change in narrative which has accompanied his ascension to the top job in Australian politics, has given both business and consumers a solid base to build on.
So, while global events are still very important for business and consumers in Australia in all likelihood if the new PM can build on the momentum he already has this, and the lower Aussie dollar, should materially improve operating conditions for Australia.
Greg McKenna is and economist, trader and adviser. He runs his own consultancy and writes for Business Insider Australia. You can find him on Twitter @gregorymckenna or email: firstname.lastname@example.org.