Slow growth fig­ures defy RBA

The Australian - - THE NATION - MICHAEL RODDAN

Weak­en­ing ex­ports are com­pound­ing fears of a gen­eral eco­nomic slow­down in Aus­tralia as house­hold bud­gets are stretched, and an­a­lysts warn the Re­serve Bank will be forced to over­haul its overly op­ti­mistic growth fore­casts.

House price falls are also ap­pear­ing to frighten con­sumers into shut­ting their wal­lets ahead of the key Christ­mas trad­ing pe­riod, with Aus­tralian Bu­reau of Statis­tics data yes­ter­day show­ing a 0.4 per cent de­cline in re­tail sales in NSW, where house price falls have been most dra­matic.

Na­tion­ally, re­tail rose 0.3 per cent in Oc­to­ber, up from 0.1 per cent in Septem­ber, which had to be down­wardly re­vised.

Sep­a­rate fig­ures showed the na­tion’s ex­ports in­creased far less than ex­pected, although there was still a healthy $2.3 bil­lion trade sur­plus in Oc­to­ber.

It came as global rat­ings agency Fitch warned that the RBA would no longer lift of­fi­cial in­ter­est rates from record-low lev­els next year, re­vis­ing down its fore­casts for the re­cov­ery in the lo­cal econ­omy.

Of­fi­cial data yes­ter­day showed the Aus­tralian econ­omy grew at its slow­est pace in two years, sharply slower than ex­pec­ta­tions, fol­low­ing a large dip in min­ing in­vest­ment that wasn’t off­set by an ex­pan­sion in non-min­ing in­dus­tries, and amid weak­ness in the re­tail sec­tor as stretched house­holds reach their spend­ing limit.

“We ex­pect growth to face con­tin­ued down­side pres­sure over the com­ing quar­ters from slow­ing pri­vate fixed-cap­i­tal for­ma­tion growth due to a de­clin­ing hous­ing mar­ket and eas­ing min­ing in­vest­ment, and min­ing ex­ports to face head­winds from slow­ing Chi­nese de­mand,” an­a­lysts at Fitch said.

Aus­tralia is en­joy­ing a strong run of big trade sur­pluses, sup­ported by high com­mod­ity prices, ex­pand­ing ex­ports of liq­ue­fied nat­u­ral gas, and a lower Aus­tralian dol­lar. Gas ex­ports are boom­ing as vast new pro­duc­tion fa­cil­i­ties have been com­mis­sioned across the coun­try’s north.

“House­hold spend­ing isn’t fall­ing off a cliff just yet but we still think that the down­turn in the hous­ing mar­ket will re­strain con­sump­tion growth be­fore long,” said Cap­i­tal Eco­nom­ics’ Mar­cel Thieliant. “House­holds still seem to be cop­ing rea­son­ably well with slug­gish in­come growth and fall­ing hous­ing wealth, but we think their re­silience won’t last. And any slow­down in con­sumer spend­ing may not be cush­ioned any longer by ris­ing net ex­ports.’’

JP Mor­gan econ­o­mist Ben Jar­man said the re­tail fig­ures were con­sis­tent with a slow­ing sales en­vi­ron­ment.

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