Jul 3, 2014

Economy coming off the boil as Stevens sets things straight for the markets

The economy is losing steam in the second quarter of the year, and the budget didn't help. But RBA governor Glenn Stevens says interest rates will be steady for a long time to come, Glenn Dyer and Bernard Keane write.

The economy’s flat second quarter performance has continued, according to data released by the Australian Bureau of Statistics this morning, and Treasurer Joe Hockey in particular seems to have scored a direct hit on retail sales with his apocalyptic budget rhetoric. But the real economic action was down in Tasmania.

The good news appeared to be in housing construction: seasonally adjusted figures showed a 9.9% rise in total dwelling approvals, including a massive 27.2% rise in approvals for non-house dwellings. But that reflects the problems we discussed last month, when Easter and Anzac Day combined to cut approval numbers — as we predicted then, the May numbers have bounced back. The trend figures, however, are much flatter, with total dwelling approvals down 1.7%.

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