Today’s Q1 national accounts from the Australian Bureau of Statistics (ABS) revealed that Australians lurched back into recession, with per capita GDP growth declining by 0.2% over the quarter:
Per capita GDP has declined in nine of the last 11 quarters, down a total of 1.7% over that period.
The overall economy also grew by only 0.2% over the quarter, well below consensus estimates of a 0.4% rise.
Katherine Keenan, ABS head of national accounts, explained that: “Economic growth was soft in the March quarter. Public spending recorded the largest detraction from growth since the September quarter 2017. Extreme weather events reduced domestic final demand and exports. Weather impacts were particularly evident in mining, tourism and shipping”.
Household consumption remained soft, recording zero per capita growth in Q1 and a 1.0% decline year-on-year:
Alex Joiner, chief economist at IFM Investors, noted:
“The modest acceleration in the year-ended growth rate from the nadir reached in Q3 2024 has largely stalled. The result underwhelmed the RBA’s relatively modest quarterly expectation of 0.45% qoq growth and 1.8% yoy”.
“The Bank now needs 0.7% qoq in Q2 to hit its forecast—a rate not seen since Q2 2022”.
“This outcome adds to the case that it is appropriate for the RBA to ease policy settings further. However, for now, taken together with a tight labour market, it supports the Bank’s assertion that there is currently no need to move to an “expansionary stance”.
Extreme weather events aside, it was another disappointing result.
