Another month down and it is time to see how the month of May played out here in Australia, we will be looking at Australian Business and Property in particular, however it will be interesting to see if we will be impacted by the US and their debt ceiling crisis. If you wanted to read up about that please click here.

I digress, lets have a look at how Aussie companies performed for May.

According to the latest data from the Australian Bureau of Statistics (ABS), Australian companies had a mixed performance in May 2023. Some of the key statistics are:

– Business indicators showed that company gross operating profits rose 10.6% seasonally adjusted in the December quarter 2022, while wages and salaries rose 2.6% seasonally adjusted.

– Private new capital expenditure rose by 2.2% in the December quarter 2022, with buildings and structures rising by 3.6% and equipment, plant and machinery rising by 0.6%. The first estimate for 2023-24 was $129.7 billion, which is 11.1% higher than the first estimate for 2022-23.

Chart depicting business turnover (sales) this year vs last, seasonally adjusted. Retail has fallen however the Arts and Recreation are up.

– The monthly business turnover indicator showed that in seasonally adjusted terms, the March 2023 monthly business turnover indicator showed rises in 11 of the 13 published industries, with the largest rise being in arts and recreation services (9.7%). Through the year, rises were seen in all 13 published industries.

These figures suggest that Australian businesses are recovering from the impact of the Covid-19 pandemic and the interest rate hikes by the Reserve Bank of Australia (RBA), which have seen official rates rise by 3.75 per cent over the last year. However, there are still some challenges and uncertainties ahead, such as supply chain disruptions, labour shortages, inflation pressures and potential further rate hikes.

This chart shows the business turnover for the Arts and Recreation which has transitioned out of it's slump, and moved away from the rocky months of covid from previous years.

According to the latest data from CoreLogic, Australian real estate prices have defied expectations and continued to rise in May 2023, despite the RBA’s tightening cycle. Some of the key statistics are:

– The national home value index increased by 0.8% over the month of May, bringing it to a new record high. The annual growth rate was 4.4%, which is the highest since June 2017.

– All capital cities recorded positive monthly changes in home values, with Darwin leading the way with a 2.4% increase, followed by Hobart (1.9%) and Canberra (1.7%). The smallest gains were seen in Sydney (0.4%) and Melbourne (0.5%), which are also the most expensive markets.

– The national median dwelling price was $688,354 as of May 2023, with Sydney being the most expensive capital city with a median of $1,039,488, followed by Melbourne ($774,254) and Canberra ($759,217). The most affordable capital city was Perth with a median of $496,609.

Private Dwelling construction has fallen below normal trend lines and well below the peak during covid when credit was readily available.

These figures indicate that Australian real estate is experiencing a strong demand-driven recovery, supported by low interest rates, government stimulus measures, population growth, limited supply and rising consumer confidence. However, there are also some risks and challenges ahead, such as affordability constraints, tighter lending standards, higher interest rates and potential oversupply in some segments.

In summary, Australian companies and real estate performed well in May 2023, showing signs of resilience and recovery from the Covid-19 pandemic and the RBA’s tightening cycle. However, there are still some uncertainties and challenges ahead that could affect the outlook for both sectors.