The 10 signs that will show the economy is recovering

While Australia has so far been able to duck clear of the recession sweeping across most of the western World, the economy has already felt the full force of a downturn. Courtesy of Time.com, here are the top 10 signs to watch for that will indicate the economy is on the road to recovery.

Home sales: While a poor housing market is more of a US problem than it is Australia’s, sales of new property dropped off towards the end of last year. Thanks to the Government’s increased first home owner grant, the industry has been given a kick, but when this sector really takes off again it will likely bring the greater economy with it. Experts point to a late 2009 or early 2010 recovery.

2. Jobs: Unemployment is at 4.8%, and is forecast to reach 7% by 2010. Businesses are dropping workers constantly, with the latest move of Pacific Brands in axing 1850 workers. Business confidence is low, but when firms start hiring again it’s a good sign the economy is moving into better times.

3. Jobs…again: Along with full time unemployment rates, economists are watching temporary work rates. Companies usually ask existing employees to work extra hours, so when they start taking on temporary workers, full-time employment is sure to follow.

4. Car sales: The auto industry is in shambles. Major companies in the US are on the receiving end of multi-billion dollar loans from the US Government, but new car sales in Australia in January fell 16.5% from 12 months before. The sector has been hit hard, but improved sales should be a key indicator the economy is turning upwards.

5. Retail sales: The retail industry was given a gentle nudge by the Government’s $10.4 billion stimulus package last year, but sales only managed to rise just 0.8% in the December quarter. While lower petrol prices and interest rates have provided many families with extra cash, they’re unwilling to spend it just yet. When they are, it’s a good sign the economy will be on its way to recovery.

6. Interest rate spreads: The difference between the official interest rate and borrowing rates typically widens during a downturn. When they start to narrow, it will likely indicate credit is flowing more freely.

7. Pasta sales fall: An easy, cheap meal, which is exactly the thing families are looking for when money is tight. When pasta sales go up it’s a sign they’re pulling back on fancier foods, and the opposite when the economy is on the rise.

8. Cardboard prices rise: Liner board, a main component of cardboard, usually experiences a surge in sales when boxes are being manufactured. Boxes are mainly used for packaging products, so when boxes are being sold you can be sure the products inside them are being sold as well.

9. Nasty bill collectors: Major credit card companies are now politely negotiating with customers with overdue bills, in an attempt to get as much money as possible when people are pulling back on discretionary spending. When the economy adjusts and their business recovers, they’ll no longer need to negotiate.

10. Box office sales: The number of movie tickets sold dropped 4% in the US last year, as millions of cinema-goers prefer a home theatre system to the big screen. When box office sales recover, it’s a sign that discretionary spending will be on the rise.