By Peter Switzer

I’m writing this from Italy, so let me show you the economic story of this country — the ninth biggest economy in the world! Look at how many times its growth has been below the zero point.

Now look at the champions of economic growth — us!

 

We’ve been below the zero point three times in 40 quarters and never for two in a row. And what’s more, we’ve done it for 25 years and, as of today, it will be 103 quarters without a recession.

Today, even if we get a negative number for real GDP growth, we equal The Netherlands, which once upon a time managed the same 103 milestone.

If we register a positive reading today, then a technical recession can’t happen between this March quarter result and the next one for the June quarter, which gives us the world record and champion grower status.

Of course, some eternal pessimists will find some reason to gripe about our growth story. Some are using the current soft patch to suggest that we could end up with negative readings for today’s March quarter growth and the June one, so let’s test out its likelihood.

Right now, our two biggest problems are slow wages growth and weak business investment. If these change, we’d be laughing but I reckon they will need 12 to 24 months to be in gangbusters’ land.

Other economic readings for the June quarter (April to June) look promising. Let me show you below:

  • Employment rose by 37,400 in April, after rising by 60,000 in March. Full-time jobs fell by 11,600, while part-time jobs rose by 49,000. Economists had tipped a 5,000 increase in jobs.
  • Unemployment fell from 5.9% to 5.7%.
  • Job advertisements rose to six-year highs, up by 0.4% in May and up 7.5% on a year ago.
  • The weekly ANZ/Roy Morgan consumer confidence rating rose by 0.7 points (0.6%) to an 8-week high of 112.9 in the week to June 4.
  • The NAB business conditions index rose from +12.3 points to +14.3 points in April, a 9-year high. The business confidence index rose from +6.5 points to +12.9 points, a 7-year high.
  • The Performance of Services index fell 1.5 points to 51.5 in May. The index remains over 50, signifying expansion of the services sector.
  • New motor vehicle sales totaled 102,901 in May, up 6.4% on a year ago and a record for a May month.
  • Retail trade rose by 1% in April – the biggest rise in over 2½ years. Annual growth rose from a 4-year low of 2.2% to 3.1%.
  • Over the last six months, investment expectations have lifted by 5.1%.
  • The CoreLogic Home Value Index of capital city home prices fell by 1.1% in May but was up 8.3% over the year. It was the biggest monthly fall in prices in 18 months but the RBA, APRA and the Government want to kill this bubble talk, so we’ll take it as a good thing!
  • The Performance of Manufacturing index fell from near 15-year highs, down by 4.4 points to 54.8 in May. A reading above 50.0 indicates that the sector is expanding. This was the eighth consecutive month of expansion.
  • Housing approvals rose by 0.8% in April. Meanwhile ‘lumpy’ apartment approvals rose by 8.9% in April.
  • New home sales rose by 0.8% in April, after falling by 1.1% in March.
  • One ‘baddie’ was this: private sector credit rose by 0.4% in April, after a 0.4% gain in March. However, annual credit growth of 4.9% is the slowest in three years.

With all this on board, have a look at this from Richard Holden from the UNSW Business School — my old teaching location and Alma Mater.

“Australia's economy looks like it has avoided recession for 25 years. But right now, the economy is sputtering along.

 “We shouldn’t be celebrating this too much — there is the very real prospect that Australia’s run of uninterrupted growth could come to an end.”

He could be right about our good run ending soon but, looking at the April/May data above, I think June will be good for optimists. Cyclone Debbie wasn’t a help to growth in the March quarter and fixing up her mess could kick growth rates up.

Let’s hope so but let’s celebrate our great effort in growing so well. Prime Ministers, Treasurers, state governments, business leaders and damn hard working as well as smart working Aussies have all contributed and sacrificed to create this great economy of ours and we should be bloody proud of it.

Any dissenters can eat our shorts, as Bart Simpson would say.

By the way, I’m not just relying on Bart for my future optimism, as this is what the RBA Governor and his pals said this week: “Business conditions have improved and capacity utilisation has increased. Business investment has picked up in those parts of the country not directly affected by the decline in mining investment. Year-ended GDP growth is expected to have slowed in the March quarter, reflecting the quarter-to-quarter variation in the growth figures. Looking forward, economic growth is still expected to increase gradually over the next couple of years to a little above 3 per cent.”

You’re a champion too, RBA!