Australia falls into per-capita recession as growth tumbles

ABS chief economist Bruce Hockman said growth in the economy was subdued, reflecting soft household spending and a decline in housing investment.

“The approvals for dwelling construction indicate that the decline in dwelling investment will continue,” he said.

Government spending was the major driver, with public investment remaining at high levels particularly through large infrastructure projects funded by the NSW and Victorian governments. Record spending on aged care and the National Disability Insurance Scheme also continue to prop up an otherwise slowing economy.

Households in particular are reluctant to spend, with falling house prices affecting the amount consumers are willing to part with.

Household spending grew by 0.4 per cent, continuing the modest spending trend in recent quarters. Investment in dwellings fell 3.4 per cent.

Most of the spending that did occur was driven by rises in health, up 1.9 per cent, and clothing and footwear, up 2.2 per cent.


National Australia Bank economist Kaixin Owyong said the data makes the Reserve’s forecast of 3 per cent growth over 2019 look increasingly unlikely, as growth would need to accelerate markedly from its current rate of 2.3 per cent.

“We believe the Bank will be increasingly uncomfortable with the ‘growing tension between strong labour market data and softer GDP data’ as the weakness in household spending appears to be more persistent than it forecast.

He said should the progress in the labour market falter over the next few months, the Reserve will likely be forced to cut rates to support households.


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