What the unemployment figures can mean for commercial loans decisions
Staying across the latest unemployment and other economic data may assist businesses make key decisions on commercial loans for major asset acquisitions
. The labour market in Australia has been extremely tight for some time as the economy records near record low unemployment rates. The situation has meant many businesses across many industries are continuing to face issues in achieving full staffing. A scenario which is limiting their ability to operate at their full capacity and realise their full potential.
These constraints can affect how business owners approach decisions to invest in new or upgrade equipment and machinery. Having some indication as to what could play out moving forward, may provide guidance as to whether the business will be well-placed to support such a major investment over the full term of the finance or not.
There are a number of statistics-based resources available through a range of Government bodies and other organisations which are available for easy access. These include statistics on the jobs and employment situation.
The unemployment figures are reported monthly by the Australian Bureau of Statistics (ABS) and are broken down into a number of data sets. These may provide intel and insights into trends in the labour market and as such, the prospects for individual sectors and/or businesses in regard to future staffing.
The latest data has recently been released and may provide the confidence to proceed with asset acquisitions with commercial loans.
Unemployment Figures – Latest Release
The Labour Force Survey
for the November period was released by the ABS last week. The report includes data on participation rates in the labour market, the unemployment rate, hours worked and breakdowns of the figures into a number of categories.
The data shows that unemployment remained steady for the period at 3.4% seasonally adjusted. As the ABS previously reported, this is one of the lowest unemployment rates recorded in Australia. A rise of 0.2% in the participation rate was recorded. This increase places the participation rate at 66.8% which the ABS reports as equally the previous highest rate in June 2022.
In releasing these latest figures, Bjorn Jarvis of the ABS commented that these figures indicate that the tightness in the Australian labour market is continuing. He also remarked that the figures for hours worked in the period were higher than rates which were seen before the COVID-19 pandemic.
The figures for hours lost due to illness were high for this time of year. While not specifically mentioned in the report, this trend would correlate with the recent increase in COVID cases being reported recently.
During the period the growth in employment was mainly in full-time jobs. Prior to the pandemic the percentage of those in full time roles sat at 68.3%. In this survey, Mr Jarvis said that percentage had increased to 69.7%. He said it was near to the percentage in full time employment that were seen about a decade ago.
Those interested in delving further into the detail can refer to the ABS site for the charts and graphs which break down the data into different specifics. The general labour force survey data can be useful. But it is general in nature and situations can vary by industry, region and on other bases. To assist specific industries the ABS also publishes industry-specific data. One such report coming out this week is for the tourism sector. In addition, the Job Australia information will also be released this week. This report covers details of roles, employers and people taking on specific roles.
The Australian Bureau of Statistics website can represent a valuable resource for a range of statistics. The ABS also reports the inflation figures which have become integral to RBA
decisions and increases in interest rates. Highlighting the importance of being across key economic data.
Employment Rates and Commercial Loans – making the connection
So how exactly could knowing how unemployment is trending influence individual decisions around commercial loans and asset finance? The connection will obviously have varying significance for different operations. But let’s present a few scenarios for consideration.
If the labour situation is improving, it may mean improved chances for a business to fill jobs and increase their capacity. This could present the need to acquire new equipment to facilitate that increase in production.
Where the situation does not look as optimistic, such as the current continued tightness indicates, it may mean it’s time to look at other ways of achieving target production. Consider the acquisition of machinery and equipment which offer improved efficiency and productivity. Achieving the same or greater output with existing staffing or reducing costs in other areas such as fuel and energy to offset the lower output levels.
Where the labour statistics indicate ongoing issues for the business, support with commercial loans such as a Business Overdraft Facility
may be required to tide the business over until the situation improves.
Whatever the scenario that results in a decision to invest, the commercial loans, especially asset finance
, must be affordable and cost-effective. That means the cheapest interest rates and individually structured loans that meet the specific objectives of that business.
If the latest unemployment figures present reason for you to invest in assets or the need for commercial loans to support the business, speak with us about the most cost-effective options. Contact Business Finance on 1300 000 033 to the options for commercial loans and asset finance.
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.