GDP growth declined
Australian economic growth slowed to 1.1% p.a. in the March quarter 2024. This is the slowest annual growth rate since December 2020.
GDP per person continued to decline for the fifth straight quarter, with a decrease of 0.4% in March and a 1.3% drop through the year.
Higher interest rates, combined with moderating but persistent inflation, and ongoing global uncertainty accounted for the sluggish economic expansion.
Public wage growth returned to trend
The Wage Price Index (WPI) rose 4.1% in the March quarter. Annual wage growth has been treading water at around 4.1 to 4.2% p.a. since 2023, well above the long-run average of 2.4% p.a.
The WPI (y/y) was 3.8% for the public sector and 4.1% for private. The easing in public sector wage growth suggests that state government enterprise agreements have resumed their usual rate of increases following a period of strong increases.
Both Treasury and the RBA forecast annual wage growth will peak at around 4.1% in mid-2024, before easing slightly towards 3.3% in 2025.
Upward march of unemployment
The unemployment rate inched upwards again to 4.1% in April. This is the highest it has been since the end of the pandemic.
A change to seasonal employment patterns around Christmas introduced a lot of volatility into the monthly data, making interpretation difficult.
But the trend series – which smooths out seasonal volatility – shows that unemployment has continued a steady climb for the last 18 months.
However, the rise is expected to remain gentle - Treasury expects it will take another year for unemployment to return to 4.5%, while the RBA expects it will take two years.
Full-time jobs out, part-time jobs in
Job creation in Australia has shifted from full-time to part-time roles.
Full-time was dominant form of job creation during the tight labour market in 2022.
However, since mid-2023 it has collapsed, with part-time job creation replacing it.
This shift has slowed the increase in the unemployment rate as the labour market slows.
But with fewer new full-time jobs coming online it also conceals a clear weakness in job creation.
Household indicator plummeted by half
April saw a modest increase of 3.4% in household spending. This rate was nearly half of what it was during the same period last year.
Healthcare was the main contributor to the growth in April. Non-discretionary spending rose 5.8% with households spending focused on fuel and food.
Discretionary spending has been flat or contracting for over a year. This is a strong indicator of weakening consumer confidence, with households cutting back on non-essentials as interest rates and financial stress rises.
Business turnover recovered
According to the latest ABS data, business turnover grew in April in eight out of 13 industries.
The turnover for the 13-industry aggregate rose by 1.5%. This is the largest increase since September 2023.
The professional, science & technical sector reported the largest rise of with 5.5% bouncing back from a 3.0% fall in April.
Mining and consumer facing industries reported weaker performance.
The Utilities & information, media & telecommunication sectors declined in the month, while manufacturing was relatively flat.
