With a further drop in unemployment in July and more RBA rate rises ahead, operators may have questions around timing to take on new business finance. The now 48 year record low unemployment level as of July, signals the continuing tightness in the labour market which is a key point noted by the RBA in guiding its rate decisions. The tightness of the current labour market can have impacts for interest rates but also for the business prospects. If not able to fill all its job roles, a business may not be well-placed to forecast optimum production let alone growth. We provide an overview of the latest information from the Australian Bureau of Statistics in relation to wages growth and employment and possible fall-out in regard to interest rates and business finance. The wages Unemployment at 48 Year Low The ABS release of the unemployment data series for July 2022  may send up red flags for some businesses that have been trying to fill job vacancies for an extended time period. The figures reveal a fall of 0.1% for the month leaving the rate at 3.4%. Female unemployment rates remained steady at June levels while males dropped by 0.2%. In the statement, the ABS notes the indication of continuing labour market tightness in these figures. A continuation of high job vacancies exists while there are fewer looking for work. Seasonally adjusted figures reveal a 0.3% drop for the month. The first fall since late 2021, October. This is not considered unusual as it often occurs around times such as school holidays. The wages growth figures were released the week before and may also be of concern to businesses. Annual figures to end of June put wages growth at 2.6% annually. This is the highest figure recorded since late 2014. Pressure has been accumulating on the wages situation over many sectors as a result of the labour tightness. Demand is high, supply is low and as a result many businesses have had to offer higher wages to attract staff of offer higher pay increases to retain staff. This could be of concern to businesses looking to take on finance. It may signal the need for higher wages bills moving forward. A factor which may impact cash flow and financial projections. Of interest to the RBA will be the gap between wages and inflation. Inflation is at 6.1% and wage growth 2.6%. The gap of 3.5% indicates cost of living pressures which may influence RBA rate rise decisions. Interest Rate Outcomes For those trying to time the best time to take on new business finance for asset acquisitions, new vehicles, equipment or possible secured business loans or overdrafts, there is a big view of the economy to take in. The labour situation may be critical to the business operation. The interest rate scenario may be critical to the repayments on new business finance. Both may place pressures on cash flow. Possibly indicating a delay in taking on finance is required. But the scenario for interest rates is that additional rate hikes are ahead. The RBA has stated on numerous occasions the situation, and its concern, for the labour market issue constraining supply. Businesses that cannot fill their vacant positions are not always in a position to operate to full capacity. This constrained capacity means less supply of their goods into the market. At the same time as this is having an effect, there are the global conditions around the pandemic, Ukraine war, supply chains and shipping which are also impacting supply. The east coast floods of 2022 have caused massive supply issues in food. This limited supply scenario coincides with high levels of consumer demand as Australians come out of lockdown and restrictions with money to spend. The mismatch between demand and supply are a key driver of prices which drive inflation. The factor that the RBA is attempting to halt with the cash rate rises. Though prices of some foods have started to come down as producers recover from the floods. The next interest rate decision will be on Tuesday 6 September. Timing Business Finance While issues around timing when is the right time for a business to apply for new finance will depend on many individual issues, there are general considerations to achieve the cheapest finance.

• Engage with us rather than take on the task alone. This ensures coverage of wider section of the lending market and better prospects of sourcing cheaper rates.
• Consider all the finance products available paying attention to the differences in interest rates.
• Maintain a good credit profile to ensure the cheapest offer is received.
• Cover off on current tax measures including temporary full expensing which is only available in this financial year.

Contact Business Finance on 1300 000 033 for all business finance requirements DISCLAIMER: THE SPECIFIC PURPOSE IN PROVIDING THIS ARTICLE IS FOR GENERAL INFORMATION ONLY. IT IS NOT INTENDED AS THE SOLE SOURCE OF FINANCIAL INFORMATION ON WHICH TO MAKE BUSINESS FINANCE DECISIONS. BUSINESS OWNERS WHO REQUIRE ADVICE OR GUIDANCE AROUND THEIR SPECIFIC FINANCIAL CIRCUMSTANCES ARE RECOMMENDED TO CONSULT WITH AN ADVISOR OR ACCOUNTANT. NO LIABILITY IS ACCEPTED IN REGARD TO ANY MISREPRESENTATIONS OR ANY ERRORS RE ANY DATA, SPECIFICS, POLICIES AND OTHER INFORMATION AS SOURCED FROM OTHERS.