As expected, “At its meeting on 5 September, the Reserve Bank Board decided to leave the cash rate target unchanged at 6.00%”.

As predicted today by Tim Colebatch, GDP growth for the second quarter was slower than the first quarter, and slower than expected, with the trend measure of GDP (chain volume measure) up 0.5% (2.3% year on year). This is down from 3.1% in the year to March.

However, real net national disposable income was up strongly, rising 1.1% in the second quarter and 4.1% in the year. The difference between the two was the sharp continued improvement of terms of trade, up 1.9% in the quarter and 6.7% over the year.

The slower than expected GDP growth therefore does not indicate the economy is moving into bear-mode. Indeed, an NAB business survey released yesterday found that conditions are favourable for small to medium enterprises (SMEs).

The June quarter survey found that SMEs in the health, construction and property sectors are reporting strong business conditions, while the transport and storage sectors are predictably feeling the pinch of high fuel prices. The survey also found that, in the coming 12 months, SMEs are primarily concerned about demand, and then to a lesser extent the availability of labour, wage costs and interest rates.

Finally, being old does not have much to commend it, except perhaps relative to the main alternative. But Treasurer Peter Costello is doing his best to make it financially less of a burden, and encouraging savings in the form of superannuation. The Oz reports:

Until June 30 next year, anyone under 65 will be able to shift up to $1 million into super – up from a $600,000 limit at the time of the May federal budget – paying the existing 15 per cent tax rate…The changes complete the surprise initiative of the budget to encourage super savings with a raft of measures including removing the tax on payouts from super funds for Australians retiring after the age of 60.

Read more at Henry Thornton.

Peter Fray

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