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Wednesday, 5 June 2019

Stall speed

Economy stalls

Trend growth in the economy slowed to 1.7 per cent over the year to March 2019.

Adjusting for population growth the economy is tracking at stall speed, all but locking in the next move down in interest rates. 

On the plus side, the economy has racked up a record 111 quarters since Australia's last recession, or 28 years of unbroken growth. 

Consumption was weak, and dwelling construction is subtracting further from growth.

The main bright spot has been commodities, although the rebound in nominal GDP growth also rather looks to be losing steam.

Looking at income measures, they haven't been too bad at all, despite the underwhelming growth in GDP.

Short and sharp today. 

Expect another interest rate cut to follow, then.

Adopting a glass half full stance, this is all historic information, and there's undoubtedly been a strong positive shift in sentiment since the election. 

There was a big 6-point jump in AiG's Performance of Services Index (PSI) to an expansionary 52.5, so there's been an immediate improvement which can be built upon.