Australians are starting a record number of new businesses, with over 160,000 added to the economy in 12 months.
Commsec economist Craig James said the 7% increase in a year marks a record growth since the data were first recorded 19 years ago.
The surge was attributed to a 10% rise in unemployed businesses, with James suggesting more Australians are ‘chasing their dreams’ and setting up their own businesses in times of living with COVID. doing.
“It’s no wonder big companies can’t find staff. Foreign borders have closed and people have left existing companies to set up their own businesses,” he said.
A total of 472,731 businesses entered the economy and 305,085 exited the economy in 2011/22, according to a release by the Australian Bureau of Statistics.
Victoria saw a 10.9% increase in new business and a 7.7% increase in ACT.
The construction industry saw the largest increase in the number of new business starts, with the industry recording an increase of over 33,000 businesses.
KPMG economist Brendan Lin said the increase in new construction business over the past two years was likely driven by homebuilder stimulus and a low interest rate environment that stimulated demand for construction services.
But fixed-price building contracts are common in the housing sector, so Rynne worries these new businesses will struggle at a time when material costs are so high and labor shortages are worsening. increase.
“If these new construction companies lack the skills to manage the financial risks associated with the current environment, they may face higher than usual volumes, fixed price contracts, very high cost inflation, etc. in the short term. There could be more business failures in this sector,” he said.
He also said the data shows that the failure rate for businesses alone is higher than for businesses with staff. .
James said the next two years will test fledgling businesses.
“That’s always been the case, but especially given the potential for higher interest rates and slower economic activity,” he said.
“And the survival of small businesses will be particularly important to the broader job market and central bank policy.”
Queensland-based homebuilder Oracle Homes collapsed on Wednesday, laying off about 70 staff and halting construction work on about 300 homes.
The ABS also released detailed labor force data on Thursday, showing Australia’s regional unemployment rate tightening to 3.4% in July from 3.8% in June.
CommSec economist Ryan Felsman said this showed the region was operating at “full employment,” similar to the national unemployment rate.
“The region’s job market is extremely tight, exacerbating an already severe skills shortage and curbing business and potential economic activity,” Felsmann said.
Rising interest rates are starting to slow spending momentum, according to ANZ.
So far, average daily spending in August is 0.1% lower than the July average, with lower discretionary retail spending leading to a slowdown.
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Australian Associated Press is an Australian news agency.