After one of the hottest summers on record, many Australians will welcome Autumn and the opportunity to be more active outdoors and perhaps get busy in the garden. There will be no let-up in the heat on the political and economic front though, with the Budget and a Federal election looming.
The Australian economy began to show signs of slowing in February, on global concerns about the US-China trade war, Brexit and higher oil prices; and falling property prices locally. The Reserve Bank cut its forecasts for economic growth and inflation in 2019 to 3 per cent and 2 per cent respectively. RBA Governor Philip Lowe said there was no ‘strong case’ for a near term change in the cash rate from its low of 1.5 per cent.
The economic slowdown is reflected in company earnings. As the profit reporting season draws to a close, 94 per cent of companies reported a profit in the December half, but only 50 per cent increased profits on a year ago. Retail spending is also sluggish, up 0.1 per cent in the December quarter and up 3 per cent over the year. The price of unleaded petrol rose in February, from a national average of around 130.8c a litre to 136.9c last week on rising global oil prices. Brent Crude rose 8 per cent in February to more than US$66 a barrel. Consumer sentiment fluctuates; the weekly ANZ-Roy Morgan survey fell four points over the month to 114.1, still above the long-term average.
On a positive note, unemployment was steady at a 7-year low of 5 per cent in January, while the NAB business conditions survey rose from a 4-year low to +6.6 points in January. The Aussie dollar is roughly unchanged at around US71.5c.