Australian consumption growth to slow again - Capital Economics

FXStreet (Bali) - Paul Dales, Chief Australia & New Zealand Economist at Capital Economics, notes that despite the acceleration on Australian consumption growth, it looks set to slow again later this year.

Key Quotes

"The apparent acceleration in consumption growth in the first quarter will boost hopes that, despite the end of the mining boom, the Australian economy will avoid a sharp slowdown. Unfortunately, the recent improvement in consumption growth probably has more to do with the one-time boost to spending power from the lower petrol price rather than anything that will be sustained."

"Once households have spent the cash saved at the petrol pump, consumption growth will probably slow again. This is especially the case if we are right in expecting both employment and wage growth to slow this year."

"That said, March’s labour market data, which are due to be released on Thursday, will probably show that jobs growth is just about holding up. The survey evidence is consistent with another rise in employment of about 15,000. If the size of the labour force rebounds after the small decline in February, then that might be enough to prevent the unemployment rate from increasing from 6.3%."