Monthly inflation spike in May

Australia’s monthly CPI rose to 4% in May from 3.6% in April. It was the highest monthly data for 2024.

The main contributors to the monthly inflation spike in May were housing (5.2 %), food and non-alcoholic beverages (3.3 %), transport (4.9 %), and alcohol and tobacco (6.7%)

Quarterly CPI for March quarter sat at 3.6% p.a., and producer prices growing by 4.3% p.a. The RBA forecasts inflation to return to target by end 2025, while Treasury calls in the mid of 2025.

Completed construction declined

According to the latest ABS data, the total construction work done fell 2.9% in March quarter 2024.

The value of completed residential construction declined by 1.2%, reaching $19.58 billion. This is the lowest level of construction work done since June quarter 2022.

Construction work done declined across all states and territories. New South Whales and South Australia experienced the second successive quarterly contraction with -1.7% and -5.0% respectively.

Capex grew slower

ABS data shows private new capital expenditure (capex) was slow to 9.5% in the March quarter 2024. This was the lowest year-over-year rate in capex seen since March quarter 2021.

Non-mining capital expenditure remained unchanged from previous quarter at 10.6%, showing the investors are holding off in this economic downturn period.

The wholesale trading and real estate market had low capex growth as they struggled with financial pressures. However, construction sector experienced the notable capex growth at 64.4%.

Vacancies remain elevated

The national job vacancy rate is currently 2.3%. This is down from peak of 3.1% in mid-2022, but well above the average of 1.5% in prior decade.

The gap between the number of vacant jobs and unemployed people has continued to wide, now at 246,000.

However, the gap remains much narrower than its normal level of 500,000.

This suggests that the Australian employment market has yet to return to normal demand and supply.

Flat retail turnover in May

According to ABS data, retail turnover in Australia modestly rose 0.6% in May 2024.

Increased retail turnover in May can be attributed to the early end of financial year promotions. The Australians anticipated these sales events in order to maximise their savings on retail expenditures.  

Although the seasonally adjusted numbers slightly rise, the retail turnover remains flat in trend term. The per capita retail turnover was $1605 in May, a very marginal 0.4% growth.

This demonstrates that retail spending continues to be low in the face of ongoing price pressure. 

Imports recovered after 2 years

After two consecutive quarters in negative territory, export of both goods & services slightly recovered in March quarter. 

At the same time, imports of both goods & services were up 5.1% in the same quarter. This is the highest rate per quarter since March 2022.

Depleted wholesale and retail inventories from previous quarter were replenished due to an upswing in imports.

Liquified natural gas, non-monetary gold and meat. drove 1.1% of goods export growth.