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ISCOVER
Staff Reporter
A one per cent drop in housing finance, accompanied by a softening of consumer and business confidence, should be expected this week, according to AMP chief economist, Shane Oliver.
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A 10,000 fall in employment figures and a rise in unemployment to 5.3 per cent from February’s 5.2 per cent are also likely, Mr Oliver said.
“The RBA left interest rates on hold despite an overwhelming case to cut them,” Mr Oliver said.
“GDP growth is running well below trend; key sectors of the economy such as retailing, construction, manufacturing, tourism and the financial sector are depressed, with the mining boom providing an insufficient offset; the labour market is weakening; fiscal drag equal to around 2.5 per cent of GDP will hit in the next financial year; and wages growth and inflation are benign.
“However, the RBA has at least moved to a strong easing bias in now acknowledging that output growth is below forecast and below trend but decided to put off a cut until it gets a look at the March inflation data due April 24,” he said. “We think it will be benign and clear the way for a May cut.
“The trouble though is that the RBA should have cut in February and the delay is needlessly threatening the economy.”
