Justin Fabo at Macquarie Group has charted Tuesday’s weak ABS Household Spending Indicator (HSI) against household consumption in the national accounts:
Source: Justin Fabo (Macquarie Group)
As shown above, the HSI is pointing to a further softening of household consumption growth when the ABS releases the September quarter national accounts on Wednesday.
This is concerning since household consumption drives more than half of Australia’s economic growth on average.
The June quarter national accounts, released in September, showed that Australia’s economy was already experiencing a per capita recession following two consecutive quarters of decline:
This decline in per capita GDP was driven by a 0.2% fall in real per capita household consumption over the year to June:
Thus, the latest deterioration in the ABS HSI portends another leg down in per capita GDP and a prolongation of the recession.
