Henry Thornton writes:

Australian retail sales rose by 0.8%
in January, compared with a revised 0.5% in December and economists’
expectations of 0.3%.

Wednesday’s GDP data for the
December quarter confirmed that the economy is going through a soft patch, as
one of the market economists commented to the media. If one wanted to nitpick –
and who doesn’t with economic data – one would grizzle that fiscal pump priming
(government consumption) accounted for all of the recorded 0.5% GDP growth. Of
course that is slightly unfair, as business investment added 0.7% to growth, but
that was offset by a fall in inventories and negative net exports (again).
Productivity growth picked up, but only as a result of Aussies working fewer
hours rather than increasing output.

The weaker than expected GDP growth
has led commentators to say “This means interest rates are on hold.” This
suggestion of renewed spending by consumers leads in the opposite direction. The
Reserve bankers will be feeling quietly vindicated in their fence
sitting.

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