Qld retail trade grows strongly in March quarter – good sign economy is re-balancing post-mining boom

The latest retail turnover data released by the ABS today confirm my view that growing consumption spending will help offset the negative impacts of the end of the mining boom (see my speech on the end of the mining boom). The March quarter figures were very encouraging for Queensland, with a quarterly growth rate in real, seasonally adjusted retail turnover of 1.9 per cent (see chart below). Growth in the rest of Australia was less spectacular, but still a positive 0.3 per cent or around 1.4 per cent on an annualised basis, broadly in line with population growth.

Retail_Mar15

For additional information regarding the latest data, see Queensland Treasury’s information brief.

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3 Responses to Qld retail trade grows strongly in March quarter – good sign economy is re-balancing post-mining boom

  1. White Elephant says:

    Gene – with commodity prices falling and leading to a subsequent decline in per capita income in Australia – I would have thought the only way retail spending can continue higher is via immigration and or more personal debt.
    How much retail spending is going to be required to replace the soon to be lost production from the thousands set to lose their jobs in Gladstone?
    Borrowing to buy things from overseas is barely a plan. Australia needs to start investing.

    • Gene Tunny says:

      Thanks for the comment, White Elephant. In the short-run I think a reduction in household savings/increased debt can help fund higher consumption. There is certainly some doubt about the sustainability of household borrowing, but that won’t really be tested until we have a recession, which I don’t see in the short-term. I expect (or rather hope) a lot of the people who were working on the Gladstone projects saved significant amounts of their relatively high incomes and should be able to smooth their consumption.

  2. The Happy Hillbilly says:

    I would say the uber-low interest rates are doing their work and the borrowed money being pumped into housing is washing around and helping keep things going.

    How much further we can take this is a good question though. Gene, say that the RBA were to decide to run a ZIRP, how much of the next 200bp worth of cuts from here to there would you expect the banks to pass on?

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