The March quarter national accounts from the Australian Bureau of Statistics (ABS) reported that the economy is sliding back into a per capita recession, with real per capita GDP falling by 0.1% in the March quarter – the 10th decline in 15 quarters since Labor took office in mid-2022.
The Westpac-Melbourne Institute leading index has been released, which indicates the likely pace of economic activity relative to trend three to nine months into the future.
The six-month annualised growth rate fell further to –0.36% in June, “broadly consistent with quarterly GDP growth stalling flat”.
“The latest update points to a further loss of momentum across the Australian economy”, Westpac’s Head of Australian Macro-Forecasting Matthew Hassan said.
“The June update marks the sixth consecutive below-trend read on the Leading Index growth rate and the weakest pace since late 2023, when quarterly GDP growth stalled flat”.
“While the latest growth pulse is still not overly weak, it is broadly consistent with stalling activity through the middle of the year”.
“The detail suggests the conflict-related spike in fuel prices in March–April and the RBA’s interest rate rises in February, March and May are now weighing materially on growth, with the effects working through a variety of channels”, Hassan noted.
Meanwhile, as Justin Fabo from Antipodean Macro illustrated last week, the NAB employment index has fallen sharply, suggesting firms are retrenching staff:
We will receive the June labour force report from the ABS later this morning.
Regardless, the economy continues to slow, as one would expect given recent interest rate rises and poor productivity growth.
This suggests that Australia’s per capita recession will deepen.
