Economy recovers faster than expected from the coronavirus recession

Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)

The federal government is being urged to place stricter controls on stimulus programs as the economy recovers faster than expected from the coronavirus recession.

The economy expanded at its strongest rate in more than 40 years during the September quarter and data suggests the strong rebound should continue into 2021.

Commercial credit bureau CreditorWatch has found debtors are taking an average of 33 days to pay bills, compared with a peak of 47 days in June and during the depths of recession.

"The recovery in payments data is a clear indication the economy is on the way back, supported by better-than-expected GDP numbers for the September quarter," CreditorWatch chief executive Patrick Coghlan said.

"There's potential for the federal government to consider introducing further means tests for economic stimulus programs such as JobKeeper, to reduce pressure on the public purse and allow economic conditions to normalise."

The JobKeeper wage subsidy is not due to end until March next year.

Mr Coghlan also believes the temporary moratorium on trading while insolvent should end at the end of this month.

"Extending this provision risks causing damage to the economy as solvent firms could be extending credit to insolvent firms, potentially creating a domino effect down the track if insolvent firms are allowed to continue to operate," he said.

More than 3000 Australian companies have avoided going into external administration since April, compared to figures from 2019.

Meanwhile, the release of the monthly consumer sentiment survey will add to a spread of confidence gauges pointing to Australia accelerating out of the pandemic.

In November, sentiment soared to a seven-year high, an encouraging sign for retailers during their peak Christmas period.

The consumer confidence index also rose by a further 1.7 per cent in the past week to its highest level for 2020.

It was the second consecutive week confidence rose and means it has increased 13 times in the past 14 weeks.

The monthly National Australia Bank's business survey also showed confidence rising for a fourth straight month in November and to its highest level in two-and-a-half years.

Business and consumer measures provide crucial pointers for future household spending, investment and employment.