Australia | Sep 20 2010
By Greg Peel
We all know that Australia's economy is practically “booming” given above-trend growth has been achieved seemingly five minutes after the world's second most devastating financial crisis hit, but we also know it could easily be a very different story.
One need look no further than a retail sector which, at the discretionary level, seems now to be stuck in a constant discount mode as shoppers stay away in droves. Despite low unemployment, consumers remain timid after the GFC reality check and fearful of the impact of potential RBA rate rises on a bubbling housing market. Those rate rises would be a result only of a strong mining sector, and a lot of the surprisingly low unemployment result can be attributed to the resource sector as well. Fortunately, the RBA also recognises the “two-speed” nature of Australia's economy, but the central bank may yet have to yield to resource-driven inflation in the wider economy.
But just how weak is Australia's ex-mining economy?
Perhaps not so weak after all, suggests CommSec, if you consider that mine workers and executives would have little reason to be flying the Sydney-Melbourne air route. Despite this, and despite Australia's comparatively small population, SYD-MEL is now the third busiest air route in the world and might even be the second busiest behind Tokyo-Sapporo if it's knocked off Jeju-Seoul, CommSec suggests.
CommSec is basing its claim on the recent government bureau data which suggest SYD-MEL provided 834,300 seats per month (return) in July. The Centre of Asia Pacific Aviation put SYD-MEL in fourth position on 780, 932 seats in its July numbers, behind Fukuoka-Tokyo on 811,521. Jeju-Seoul was on 848,151. Fifth place was Shanghai-Beijing on 689,287.
The SYD-MEL result is up 15% on last July. Not only does CAPA have that route in fourth place, but SYD-BRI is in twelfth spot, MEL-BRI 34th, ADL-MEL in 47th and SYD-COO (Gold Coast) is just out of the top 50. All of Australia's top seven routes showed double-digit annual gains from last July, notes CommSec. SYD-MEL growth is the fastest in nine years.
“Clearly,” says CommSec, “there is much more to Australian than what's happening in the mining sector”.
So perhaps we shouldn't be quite so fearful of the lack of diversity in Australia's economic surge, nor concerned that rate rises will kick the rest of the economy when it's still down.