Nervous households choosing to save and business is suffering: CCIQ
- Business conditions and confidence remain weak with subdued retail sales, building approvals and construction activity
- Queensland living standards went backwards over the year
- Government expenditure and merchandise export growth remain the key drivers keeping the economy out of recession
The Chamber of Commerce and Industry Queensland (CCIQ) notes the Australian National Accounts (GDP) data shows households remain nervous choosing to save rather than spend, despite decreasing income tax rates and interest rate drops.
CCIQ Chief Economist Dr Marcus Smith, said these figures are not surprising as business confidence is at its lowest levels since the GFC.
“The weak national data follows the disappointing annual Gross State Product (GSP) print for Queensland to June that came in at just 1.4%, which when taking into account population growth of 1.8%, shows that living standards went backwards in the State over the year.
“Queensland’s State Final Demand (SFD) grew by just $49 million (0.05%) during the September quarter to $89.506 billion (1.3% year-on-year basis) with government expenditure and population growth remaining the key drivers keeping the economy out of recession.
“Australia’s balance of payments for September reinforced just how fortunate the nation is that merchandise trade exports continue to perform strongly.
“The merchandise trade figures shows that commodities continue to bolster the country’s finances over the September quarter with exports of iron ore amounting to $27.7 billion, followed by coal $15.9 billion, natural gas $12.9 billion and gold $7.3 billion.
“Exports of goods out of Queensland amounted to $21.8 billion over the quarter to September and $87.6 billion for the 12 months, representing a 13 per cent increase year on year. Coal continues to be the State’s largest export for the year at $37.9 billion and China remains the State’s largest export destination followed by Japan and India.
“Key economic indicators such as private investment as well as business conditions and confidence remain weak with subdued retail sales, building approvals and construction activity weighing heavily on the private sector.
“Moreover, the Central Bank’s decision to keep the cash rate on hold until at least February suggests the RBA is taking a passive approach to monitor activity over the Christmas period as to gauge the full impact of recent cuts to the official rate.
“Monetary policy is essentially a blunt policy instrument, which has relatively long lags to transmit across the economy and affect economic behaviour. The RBA would ideally prefer to see greater consumption and construction activity without inflating a residential property bubble,” Dr Smith said.
CCIQ notes that small business conditions recorded the worst read on record and the lowest confidence level since the wake of the global financial crisis according to the Suncorp-CCIQ Pulse Survey of Business Sentiment for the September quarter.