Or a quirk in the calendar, at least, may prove to be a saving grace preventing the economy from posting its first quarterly retreat in almost a decade.
Experts have widely predicted the March quarter to slip into the red but KPMG chief economist Brendan Rynne has said those doing to the sums have forgotten to factor in February’s extra day due to the leap year.
This will add about $5.2 billion to the economy, allowing it to tip into positive territory despite being severely impacted by the drought, bushfires and now the deadly coronavirus.
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“While there is an underlying weakness in economic activity consistent with potentially negative growth, the addition of February 29 into this year’s calendar may in fact mean that Australia – and possibly many other countries that follow the United Nation’s System of National Accounts – will not see this result in the March quarter 2020,” he said.
But Dr Rynne said there is no doubt the economy is struggling and the boost from the extra day for the GDP figures would merely provide a semantic victory.
“While speculation about negative growth is understandable, the impact of the Gregorian calendar on our national accounts statistical framework means it is less likely to occur,” he said.
“This technical outcome will not change the experiences of households and businesses in the current economic environment. The economy feels weak because it is weak.
“But if the March quarter number is negative it will confirm that we have a bigger problem to deal with than we thought, even if it is masked by a statistical anomaly in calculating the level of economic activity.”
Australia’s unemployment ticked up 0.1 to 5.3 per cent this morning, compounding the bleak forecast from Wednesday that weak wage growth remained flat.
The underemployment rate also lifted in the Australian Bureau of Statistics figures, “indicating there are still lots of workers that would like more hours,” BIS Oxford Economics senior economist Sean Langcake said.
“Along with yesterday’s meagre wage growth print, these data show that there is still plenty of spare capacity in the labour market.
“We expect the labour market will lose some momentum in 2020, with employment growth slowing to less than 2 per cent.
“This will make it challenging to work through existing spare capacity, and we expect the RBA will cut rates in the first half of the year to aid this transition.”
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