No let up for members

The Chinese government is also easing tariff levels on many of our exports adding billions of dollars to our export income.

On the flip side, more home builders are going into administration, closely followed by several construction companies, with talk of quite a few more to follow. This is at a time when the Reserve Bank (RBA) Governor is saying we are not building enough houses to meet the needs of the new immigrants. We have occupancy rates in the residential rental sector in the high 90 per cent bracket, with a severe shortage of rental properties. While consumer spending fell to the lowest levels in 10 years a few weeks back, it’s now bouncing back on the news that interest rates are on hold.

As the RBA tries to put the brakes on the economy, interest rates on chattel mortgages for equipment have risen, as an example, from 3 per cent to over 7 per cent, adding significantly to monthly repayments. There is a huge number of fixed rate home loan mortgages about to rollover onto variable rate, jumping from below a 3 per cent rate to, in some cases, the high 5 per cent bracket, adding significantly to monthly repayments.

The cost of living has climbed rapidly for all Australians, offset by modest wage increases (lower than the RBA anticipated) and further exacerbated by the OPEC decision to cut oil production forcing fuel prices up. An economist once said, a 10 cent rise in the fuel price is equal to a 1 per cent increase in the interest rate. The money sucked out of the economy was at the same level, so if the impact of the RBA interest rate increases is still filtering through and the fuel price jumps 10-20 cents a litre, what impact will that have?

When asked to deputise for John Glover, your EWPA President for this edition, my mind started racing to all the things that might be of interest. The topic occupying my thoughts of late is the degree of mixed messages in the economy and how this will impact our industry.

Talking to others in our industry — rental companies, OEMs and customers — it’s clear that the current level of activity is very high with indications this will continue for the foreseeable future, in one case well into 2025. And most are seeing full order books for the next 24 months at the very least.

The latest reports show immigration at the highest level in recent years and unemployment at a record low of 3.5 per cent. The economists in the past called 5 per cent unemployment ‘full employment’, so we are well past the full employment threshold. The good news is that there are also plenty of people entering the country looking for work and anyone unfortunate enough to be out of work, can probably find a job.

The supply chain challenges seem to be easing but the impact on the cost of capital and components has been somewhere around 15 per cent, and in some cases as high as 28 per cent. The availability of equipment however, seems to be improving quickly.

So where does that leave us? In short, very busy and very positive, albeit slightly confused!