Macro Thoughts August 2024

August 2024: Australia’s Economic Treadmill

The Australian economy in August 2024 is looking a little sluggish, going nowhere fast despite the Reserve Bank’s 'best' efforts to sprint away from inflation. The RBA, in its infinite wisdom, has kept the cash rate perched at 4.35%, as it attempts to stare down inflation. The message from Martin Place is clear: if we can’t kill inflation, we’ll at least give the economy a solid bruising for optics sake.

Some wonder if the RBA should have gone harder out the gates faster, as we look over the pond to our neighbours in NZ possibly about to begin a rate cutting cycle. The RBNZ was one of the first central banks out the gates to begin the post-COVID hiking cycle.

Perhaps the RBA will Steven Bradbury this rates cycle and be able to join its peers in cutting whilst never having reached the same peak of rates, possibly saving many jobs. Time will tell.

GDP, labour market

Alas GDP growth has predictably fizzled, clocking in at a paltry 1.8% year-on-year. The heady days of post-pandemic recovery are a distant memory, as the economy now shuffles forward, weighed down by the twin burdens of high-interest rates and a cautious consumer base.

Over in the labour market, the sheen is starting to wear off. Unemployment has ticked up to 4.1%, a gentle reminder that even the seemingly indestructible Aussie job market isn’t immune to broader economic issues. While nobody's pressing the panic button just yet, some sectors are quietly shedding jobs, taking a breather as they wait for interest rate relief.

ATO enforcement, insolvencies

SMEs face tough trading conditions, accompanied with more strict ATO enforcement cracking down on outstanding debts. There was a 50 per cent jump in corporate collapses in 2023-24 per ASIC, passing the previous high of 10,757 in 2011-12 in the aftermath of the GFC.

Yet, in true Australian fashion, business operators are fighting and finding ways to stay afloat, clinging to whatever competitive edge they can muster. However director penalty notices and ATO-driven wind up orders are becoming more commonplace in the ATOs attempt to recoup an estimated $15bn in uncollected tax debts.

If you are facing multiple debt repayments obligations that are constantly eating too deep into your working capital levels, we might be able to help with a refinance consolidation.

Get in touch with our team today for an obligation free discussion!

‍