Data4Lunch: Key Takeaways on the State of the Economy

Last updated 09 Nov, 2023

The recent industry briefing, Data4Lunch, hosted by the Adelaide Economic Development Agency (AEDA), presented an invaluable opportunity for the city's leaders and decision-makers to gain economic insights from industry experts following the Reserve Bank of Australia's interest rate decision on 7 November 2023.

Event speakers, including ANZ State General Manager for SA and the NT, Adele Fiene, and AEDA Economic Researcher, Jordon Tomopoulos, offered valuable perspectives on Adelaide's economic status and trends compared to the broader national landscape. These insights are poised to empower attendees to make informed decisions, adapt strategies, and position their organisation for success.

Guiding the event as the Master of Ceremonies was AEDA's Executive Marketing Manager, Michael Rossi.

Below, you'll discover the key takeaways and essential points covered by each presenter.

View the event gallery here.

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Adele Fiene, ANZ State General Manager Business Banking SA & NT

Adele Fiene boasts an extensive career in the finance sector. Over her 20-year tenure at ANZ, she has focused on the commercial sector, evolving from a dedicated banker to the influential State General Manager of Business Banking for ANZ in South Australia and the Northern Territory.

Adele's key takeaways encompass various economic sectors:

South Australian economy

  • In Q3, Adelaide reported the highest quarterly inflation among national cities, standing at 1.7% q/q compared to the national figure of 1.2% q/q.
  • SA's unemployment rate remains low at 3.7% compared to the national rate of 3.6%.
  • Wages growth has been a touch stronger in SA compared to nationally. The Q2 Wage Price Index grew 3.7% y/y in SA vs 3.6% nationally.

Commercial Property

  • Confidence in the Commercial Property sector varies across states and asset classes. The Property Council Survey in September highlighted a negative outlook for capital values in the Office and Retail sectors but a positive one in the Industrial space, aligning with the respective construction outlooks. Confidence remains highest in Western Australia and South Australia.
  • The office sector faces challenges due to high vacancy rates, slow return-to-office trends, and rising vacancy rates in several cities, particularly in Sydney and Melbourne.
  • There's a steady but gradual increase in yields across the industry. Yields are now back to the levels of around five years ago, for most asset types and locations. But keep in mind that the RBA cash rate today sits at 4.10%, compared to just 1.50% in 2018. This suggests further in softening commercial property yields might be anticipated.

Industrial Property

  • Industrial property sector shows consistent growth driven by two primary factors—population growth and the increased prevalence of online retailing.
  • The population growth not only impacts the residential sector but also plays a crucial role in fostering demand for the transport, storage, warehousing, and logistics areas within the industrial property segment.

Retail Property

  • Retail Property assets are still mixed across asset types. Overall, Retail spending has been showing underlying weakness in the face of higher interest rates, despite ongoing population growth.
  • ANZ Research predicts spending growth will remain soft through the remainder of 2023, before lifting in 2024 as household incomes start to grow again.
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Residential Property

  • Housing prices in Adelaide have been incredibly strong – rising above their COVID peak (unlike other parts of the country) and the rental market is very tight.
  • Population growth has rebounded to levels not seen before. Overseas migration now accounts for 80% of Australia’s population growth, is unlikely to materially slow in the near term, and will continue to put pressure on the housing market.
  • The ABS reported that 174,000 dwellings were built in Australia over the past 12 months, which is the lowest since 2014. 170,000 dwellings have been approved in the past 12 months, and not all of these will reach the construction phase, meaning that a large gap in activity is likely once the current round of projects concludes.

Business Confidence

  • Business confidence has maintained a stronger position compared to consumer confidence. Business conditions remain notably above their long-term average. In South Australia, conditions slightly trail the national average but exhibit resilience.

Consumer Expenditure

  • Multiple data sources, including ABS retail data, national accounts consumption data, and ANZ card data, depict a marked reduction in consumer spending. Retail volumes, excluding inflation, have experienced negative trends for three consecutive quarters—a scenario previously seen only during the Global Financial Crisis.
  • South Australian consumption growth has demonstrated a slightly higher level of resilience compared to other parts of the country in 2023.
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Jordon Tomopoulos, Adelaide Economic Development Agency Economic Researcher

Jordon monitors the city’s economy and provides insight into an array of focus areas, supporting the evaluation of initiatives to inform strategic decisions at AEDA. Using his tertiary qualifications in economics and background in market research, Jordon uses both quantitative and qualitative research to analyse data and provide meaning to economic trends.

Below are some of Jordon’s key takeaways on the city’s economic landscape:

City’s GRP vs GSP

  • The city contributes to 17% of the state's gross product and accommodates approximately the same proportion of the state’s workforce.
  • Both the city and the state's economies have demonstrated consistent growth over the past two decades, with almost annual growth. Notably, the city's economy has outpaced the state's growth in 15 out of the last 21 years.

City vs State Expenditure

  • The city has exhibited stronger performance during periods of high visitor activity, evident during events such as Adelaide Fringe, Gather Round, and Illuminate. However, outside of these events, the state tends to outperform the city.

Cost of Living Comparison

  • Despite historically lower living costs, Adelaide has experienced a higher inflation rate over the last two years compared to the rest of the nation. In the September quarter results, Adelaide rose the highest off the back of housing and transport, other key factors were:
    • Electricity (+15.3%)
    • Automotive fuel (+6.2%)
    • Property rates and charges (+7.1%)
    • New dwelling purchase by owner-occupiers (+1.6%)

Payroll Index

  • Single Touch Payroll (STP) data from the ABS highlights Adelaide's higher growth rate compared to other capitals, observed since 2020 and particularly over the past six months.

Business Entries/Exists Per Capita

  • AEDA's Welcome to Adelaide program has facilitated the introduction of 23 firms to the city, with six of them establishing residency in Lot Fourteen, contributing an additional 1185 employees to the workforce.

City Activity

  • The rising number of international students enrolled in city campuses and the continuous growth of the workforce indicate an influx of people into the city, surpassing the levels seen in 2019.
  • Foot traffic, particularly in Rundle Mall, is consistently increasing month by month compared to the previous year.
  • The city is witnessing strong vacancy rates alongside new tenants, a robust leasing mix, infrastructure upgrades, and ongoing commercial investments.
  • An interesting trend emerges as people seem to be making a financial trade-off in their choice of travel modes, favouring an increase in public transport usage while parking usage appears to be declining.

Uncover additional data, the most recent economic reports, and more, by visiting the Data & Insights page.

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