Australia's economic miracle: How iron ore, record bumper crops and a share market surge are helping the country bounce out of a horror recession

The worst of the coronavirus crisis is well and truly over with Australia's share market hitting a nine-month high - and a bumper 2021 is forecast despite the China trade woes.

Since bottoming out in March, the benchmark S&P/ASX200 has surged by 47.7 per cent.

The Australian Securities Exchange on Monday reached a nine-month high and is only 6.7 per cent below the record high reached in February before the World Health Organisation declared a Covid pandemic.

The ASX200's high point of 6,714.7 points was reached during the first half hour of local trade.

CMC Markets chief market strategist Michael McCarthy said mining giants BHP and Rio Tinto and iron ore player Fortescue Metals Group rose following good news about a Covid vaccine.

The worst of the coronavirus crisis may already be over with Australia's share market hitting a nine-month high and the experts tipping a bumper 2021. Since bottoming out in March, the benchmark S&P/ASX200 has surged by 47 per cent

'Resources still getting a lot of support from the vaccine-positive investors,' he told Daily Mail Australia.

'It's pretty clear that buyers today are looking for exposure to growth, global growth and local growth.'  

Good news at a glance

Australian share market reached a nine-month high on Monday and has surged 48 per cent since bottoming out in March

Optimism about global growth is boosting demand for mining stocks as China still needs Australian iron ore despite trade spat

Consumer spending is up with sentiment levels at a seven-year high

Westpac tipping unemployment will return to pre-Covid levels by the end of 2022

Auction clearance rates have risen to 75 per cent on a weighted average across the capital cities

House prices last month rose in every state and territory capital 

On Monday, BHP rose 2.3 per cent to $42.43 while Rio Tinto was up 2.6 per cent to $116.20 as Fortescue added 3.6 per cent to $21.36 - well above the ASX200 average gain of 0.6 per cent.

Mr McCarthy said China, Australia's biggest trading partner, still needed good quality iron ore with investors unconcerned about the long-running trade spat.

'The simple picture is that Australian iron ore is of a higher grade than almost all other countries and the lower-quality Chinese ore needs a mix of Australian ore to keep pollution down in China, which is a major issue,' he said.

The end of the drought has also buoyed farmers with the Rabobank's Rural Confidence reading at a two-decade high. 

Winter grain harvests were at a record high while the China trade war has done little to worry farmers with 43 per cent of them in November expecting economic conditions in the agricultural sector to improve during the coming year.

Rabobank Australia chief executive Peter Knoblanche said the return of rainfall had outweighed worries about China.

'After years of drought, and low or no returns for some, the tables have well and truly turned,' he said.

With Australia now officially out of recession the Westpac bank is forecasting a four per cent growth pace in 2021, up from a previous prediction of 2.8 per cent previously. 

Unemployment, now at seven per cent, was expected to fall to 5.2 per cent by December 2022, taking the jobless rate back to the level of March 2020 before the coronavirus crisis.

The end of the drought has also buoyed farmers with the Rabobank's Rural Confidence reading at a two-decade high. Winter grain harvests were at a record high. Pictured is a Darling Downs barley farmer in southern Queensland

Westpac chief economist Bill Evans said strong consumer spending was likely to recharge the economy next year.

'We expect 2021 to be a strong year for consumer spending,' he said.

'Households will be comfortable to reduce the pace at which they are boosting their stock of savings through 2021 as confidence remains high, partly boosted by global progress around the introduction of vaccines; rising dwelling prices and a falling unemployment rate.'

In more good news on the employment front, the ANZ job ad series rose 13.9 per cent in November while the federal government's National Skills Commission reported a preliminary skilled internet vacancies increase of 7.8 per cent last month.

Mr Evans said the scaling back of JobSeeker and JobKeeper was only likely to have a short-term effect on the economy.

Westpac expected unemployment, now at seven per cent, was expected to fall closer to five per cent by 2022, taking the jobless rate back to the levels of early 2020 before the coronavirus crisis. Pictured is a Melbourne cafe worker

'The withdrawal of the government’s income support measures which will be most intense in the December quarter is likely to see a contraction in household incomes over that quarter,' he said. 

The $250 coronavirus supplement, on top of the usual JobSeeker rate of $565.70 a fortnight for the unemployed, is being reduced to $150 a fortnight from January 1 -before the dole goes back to its old level three months later.

JobKeeper wage subsidies are also being scaled back again from January 4, which will see those working 20 or more hours a week receive $1,000, down from $1,200, before the program ends on March 28. 

Australians don't seem to be too worried with the Westpac-Melbourne Institute barometer of consumer sentiment for November rising to a seven-year high of 107.7 points - well above the 100 mark where optimists outnumber pessimists.

Westpac chief economist Bill Evans said strong consumer spending was likely to recharge the economy next year. Pictured is Melbourne's busy Bourke Street Mall in late November following the lifting of lockdowns

Last month, median house prices rose in every capital city, including Melbourne, for the first time since the start of the coronavirus pandemic, CoreLogic data showed.

Auction clearances rates across Australia's capital cities reached a weight-average of 75.1 per cent, in the week ending December 6.

In Sydney, 80.1 per cent of Sydney properties sold above the reserve price with 88.6 per cent clearance rates in the Sutherland Shire and 86.2 per cent on the Northern Beaches.

Melbourne had an auction clearance rate of 73.6 per cent with the inner-south having an even higher success rate of 86 per cent.

Perth had an auction clearance rate of 78.6 per cent while in Canberra it was 75 per cent.

Newcastle had an even high auction clearance rate of 91 per cent. 

Auction clearances rates across Australia's capital cities reached a weight-average of 75.1 per cent, in the week ending December 6. Pictured is a Brisbane auction earlier this year