Chris Faulks. Photo: Supplied
The ACT economy is showing clear signs of distress as the federal government cuts the public service, the latest economic data shows.
The Australian Bureau of Statistics reports the territory was the only jurisdiction in the nation where retail sales and building approvals fell in November.
The ACT has recorded the largest slump in building approvals for the year, which industry says is attributable to post-election uncertainty.
Business figures are hoping the slump in retail sales in November will be offset by healthy spending in December's pre-Christmas shopping spree. However they fear the confidence of Canberra consumers is being severely battered by the sacking of public servants, with many more jobs expected to be slashed in the budget.
"Both consumer confidence and business confidence are going to be critical as we face the challenges of the next couple of years as the federal government works to get its budget back into surplus,'' Canberra Business Council chief executive Chris Faulks said on Thursday.
The ACT's retail turnover dropped 0.2 per cent in seasonally adjusted terms in November. This compares with a national rise of 0.7 per cent in November, up from 0.5 per cent in October
The bureau says in trend terms, the ACT recorded 0.5 per cent growth in retail sales in November, in line with the national average.
The ABS says building approvals fell by 9 per cent in the month, which was the fifth consecutive decline and the largest for the year for the ACT.
The most recent increase in building approvals was in June when the territory recorded a rise of 6.2 per cent. Since mid-2013 approvals have fallen by about 2 per cent each month in trend terms.
Nationally, dwelling approvals rose 2.4 per cent in November, which was the 13th consecutive month of increases.
Neil Evans, executive director of the Housing Industry Association ACT-south-eastern NSW region, said the slowdown in building approvals in the second half of 2013 could be attributed to the effect of the federal election. He said consumer confidence was still low due to job cuts and the industry could not expect things to improve quickly.
"It's not dire straits but it's not good, it won't be until the end of 2014 that we pull ourselves out of the trough that we're in,'' Mr Evans said.
The association predicts a 30 per
cent reduction in housing starts for the year, largely made up of a decline in unit approvals.
Master Builders Association of the ACT executive director John Miller said the data showed there was still post-election uncertainty in the ACT with decisions still to be made on public sector cuts.
''Nobody will get any comfort from a 9 per cent decline when the rest of the country is heading in a different direction even though invariably the ACT is often out of step with the rest of the country,'' he said.
''We don't need any further decline especially when the news appears to be getting better across the country.''
Ms Faulks said the trend figures for November trading in the ACT were positive and were considered to be more reliable than the seasonally adjusted data.
''In terms of turnover, the ACT is up 4 per cent on 12 months ago, which is in the range of the other states,'' she said.
''Overall I think the November retail figures are probably better than expected.
''The real test though will come with the December retail figures and the figures for the January sales.
''These are the figures that will indicate whether the ACT is going against the national trend and specifically what impact the ongoing employment uncertainty and the announcement of a fairly negative MYEFO just before Christmas has had on consumers, and the extent to which consumers disregarded those two influences and opened their purses.
''There's no doubt that people in the ACT overall are cashed up and have been paying off debt and mortgages even as interest rates fell.
''The real dampener in the ACT though is the employment expectations and the uncertainty around cutbacks in the APS.
''The other states and territories are not impacted to the same extent as the ACT when the federal government is looking at making substantial savings to bring its budget back into surplus.
''From the Business Council's point of view, retail spending is important because it gives an indication of levels of consumer confidence.''
Australian Retailers Association executive director Russell Zimmerman said the 0.7 per cent national increase was a positive sign for even higher results in December when the majority of Australians started their Christmas shopping.