Reserve Bank of Australia dumps emergency $14.7 billion into banking system and states intention to buy up Morrison Government debt, as financial system is stressed by COVID-19 pandemic

Reserve Bank of Australia, media release, 16 March 2020:

Statement by Philip Lowe, Governor

As Australia's financial system adjusts to the coronavirus (COVID-19), financial regulators and the Australian Government are working closely together to help ensure that Australia's financial markets continue to operate effectively and that credit is available to households and businesses. (Refer to earlier Council of Financial Regulators' (CFR) press release.) Australia's financial system is resilient and it is well placed to deal with the effects of the coronavirus. At the same time, trading liquidity has deteriorated in some markets. 

In response, the Reserve Bank stands ready to purchase Australian government bonds in the secondary market to support the smooth functioning of that market, which is a key pricing benchmark for the Australian financial system. The Bank will also be conducting one-month and three-month repo operations in its daily market operations until further notice to provide liquidity to Australian financial markets. In addition the Bank will conduct longer term repo operations of six-months maturity or longer at least weekly, as long as market conditions warrant. The Reserve Bank and the AOFM are in close liaison in monitoring market conditions and supporting continued functioning of the market. 

The Bank will announce further policy measures to support the Australian economy on Thursday. 

Channel 9 News, 16 March 2020:

The Reserve Bank has pumped extra liquidity into the banking system, part of a package of measures aimed at ensuring business and households have access to credit as the coronavirus causes chaos in global financial markets.

The RBA used its daily money market operation to add $5.9 billion to the system through regular repurchase agreements, well above its original intention of $2.5 billion.

That followed an injection of $8.8 billion on Friday, which had left commercial banks with a hefty $10.7 billion of surplus cash held at the RBA.....

Google to pay $481.5m in win for Australian Tax Office bringing total collected from IT giants to $1.25 billion

The Guardian, 18 December 2019:

The search engine giant Google has agreed to pay $481.5m to the Australian Tax Office in a major win for the agency in its battle to force big technology companies to pay tax in Australia.

The settlement, which covers a decade’s worth of tax between 2008 and 2018, will also help bolster a federal budget surplus that has been undermined by weak economic growth and the collapse of the Morrison government’s robodebt scheme.

It follows a lengthy campaign to get multinationals, especially technology and resources giants, to pay tax in Australia that was launched in 2015 by the then treasurer, Joe Hockey, and spearheaded by the tax commissioner, Chris Jordan.

Moves included more audits of tech and resources companies through a special ATO taskforce and introducing a suite of laws designed to force tech companies to book sales made in Australia locally, rather than running them through a tax haven such as Singapore or Ireland.

Deputy commissioner Mark Konza, who has overseen much of the ATO’s work dealing with tax-shy multinationals, said the settlement was “another great outcome for the Australian tax system”.

The ATO said Google’s settlement, together with others made by companies including Microsoft, Apple and Facebook, brought the total extra amount of cash collected from ecommerce industry players to $1.25bn.....

Unfortunately as Australia's federal budget blackhole is currently $2.1 billion and will reach a cumulative total of at least $7 billion by June 2021, the back taxes paid to date by these multinational corporations will be only a slight, passing relief for the national economy.

State of the Australian economy as it enters 2020

On 16 December 2019 Australian Treasurer and Liberal MP for Kooyong, Josh Frydenberg, put out a glowing media release concerning the health of the national economy which bears little resemblance to data his own department released on that same day.

Treasury on behalf of the Morrison Coalition Government informed Australia that it now has less income than was anticipated just prior to the 2019 federal election and, that economic growth is now slower.

Total receipts have been revised down by about $3.0 billion in 2019-20 and $32.6 billion over the four years to 2022-23.

These falls are due to less money coming into Treasury from individuals taxes, company tax and superannuation tax, as well as less dollars being collected through the tax on goods & services (GST) and lower non-tax income.

Federal government net debt is expected to be $392.3 billion in 2019-20 (19.5 per cent of GDP). Gross debt now stands at over $560.8 billion.

Slower economic growth is explained as due in part to decreased production and lower export levels in the farming sector, a decline in iron ore prices, softer wages growth, diminished business confidence & investment uncertainty.

Gross Domestic Product (GDP) nominal growth is 3.25 per cent but is expected to fall to 2.25 per cent in the coming financial year.

Wages growth is still under performing at 2.5 per cent and, there is no guarantee that the revised projection of 3 per cent wage growth by 2022-23 is achievable.

Unemployment is beginning to rise.

The number of people who had jobs fell by 19,700 individuals between the May federal election and October 2019. Employment numbers are projected to fall over the next 5 years in Agriculture, Forestry & Fishing, Manufacturing and Information, Media & Technology.

Cost of living (CPI) is not coming down. CPI rose 1.7 per cent through the year to the September 2019 quarter. This followed a through the year rise of 1.6 per cent to the June 2019 quarter. Retail prices, particularly for clothing, footwear, meat, dairy, bread and cereal products, have risen.

As for the much lauded budget surplus for 2019-20, it has shrunk from $7.1 billion to $5 billion. While the rubbery figures in forward estimates see the expected surplus for 2020-2021 reduced from $11 billion to $6.1 billion, then from $17.8 billion down to $8.2 billion in 2021-22, with the fiscal year after that supposed to bring in a surplus of only $4 billion instead of the projected $9.2 billion.

One can almost hear Morrison ordering a funding red pen through even more health, disability and welfare services/programs in a vain attempt to avoid intensifying the economic squeeze his flawed political ideology is imposing on the nation.

Notes:

* Australian Treasurer Josh Frydenberg 16 December 2019 media release at 

http://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/media-releases/2019-20-mid-year-economic-and-fiscal-outlook

* Mid-Year Economic and Fiscal Outlook (MYEFO) December 2019 at https://budget.gov.au/2019-20/content/myefo/download/MYEFO_2019-20.pdf

* Pre-Election Economic and Fiscal Outlook (PEFO) April 2019 at https://treasury.gov.au/publication/2019-pefo

* Australian Office of Financial Management (AOFM) federal government debt updates at https://www.aofm.gov.au/

* Cost of Living data at https://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/6401.0Media%20Release1Sep%202019?opendocument&tabname=Summary&prodno=6401.0&issue=Sep%202019&num=&view=

* Labour Market Information Portal, “Industry Projections – 5 years to 2024” (Excel) at http://lmip.gov.au/PortalFile.axd?FieldID=2787734&.xlsx

It appears that in a Morrison-led economy not all of his aspirational folk "who have a go" are actually managing to "get a go"

Credit Suisse Research Institute, Global wealth report 2019, excerpt:

For the past decade, global wealth creation has centered around China and the United States. This year, the United States extended its unbroken spell of wealth gains, which began after the global financial crisis in 2008. The United States also accounts for 40% of dollar millionaires worldwide and for 40% of those in the top 1% of global wealth distribution. Wealth in China started the century from a lower base, but grew at a much faster pace during the early years. It was one of the few countries to avoid the impact of the global financial crisis. China’s progress has enabled it to replace Europe as the principal source of global wealth growth and to replace Japan as the country with the second-largest number of millionaires. More tellingly, China overtook the United States this year to become the country with most people in the top 10% of global wealth distribution. 

The rest of the world has not stood still. Other emerging markets – India in particular – have made a steady contribution, which we expect to continue over the next five years. However, overall worldwide growth was modest in the 12 months up to mid-2019. Aggregate global wealth rose by USD 9.1 trillion to USD 360.6 trillion, representing a growth rate of 2.6%. Wealth per adult grew by just 1.2% to USD 70,850 per adult in mid-2019. The number of new millionaires was also relatively modest, up 1.1 million to 46.8 million. The United States added 675,000 newcomers, more than half of the global total. Japan and China each contributed more than 150,000, but Australia lost 124,000 millionaires following a fall in average wealth.....

Comparing total wealth gains and losses across the most important countries....The main losses occurred in Australia (down USD 443 billion), Turkey (down USD 257 billion) and Pakistan (down USD 141 billion).

During the past year, the total number of UHNW  [Ultra High Net Worth] adults has risen by 6,870 (4%), with every region except Africa recording a net increase. The regions adding most members were North America (4,570), Latin America (870) and Europe (710). China (up 370) and India (up 54) had a relatively quiet year. The individual countries gaining the most members were the United States (4,200) and – more surprisingly – Brazil (860) and Russia (400). Losses occurred in Korea (down 140), Turkey (down 230), Italy (down 270) and Australia (down 280)......

According to our estimates, the number of global millionaires could exceed 62 million in 2024, a rise of almost 16 million from today, and 49 million from the beginning of the century......Among developed economies, millionaire numbers in Germany, France, Italy and Sweden are expected to rise roughly in line with the global average. Canada and Spain should perform a little better, and Japan and Portugal much better. However, growth of millionaire numbers in the United Kingdom after Brexit is unlikely to match the rest of the world and we think this will also be the case with Australia and Norway. 

Also according to Credit Suisse:

• only 29 of the current crop of wannabe millionaires will make it into the winners circle by 2024; and

• Australia's wealth to GDP ratio has fallen since its 2015 level.

Read the full report here.

While for all those other Australians who are not even close to becoming millionaires, the Australian Bureau of Statistics reveals in System of National Accounts 2018-19:

• households have $46.42 billion less in total savings than they had four years ago;

• net household savings are the lowest they have been since the Global Financial Crisis years;

• these households spend less on daily needs to offset almost stagnant wages growth and a collective income tax payable bill which is $56.15 billion higher than it was in June 2015;

• regardless of any reduction in spending on daily needs, households owed a total of $95.8 billion more in loans, placements & accounts payable than they did in June 2018; and

• although employee compensation (wages) has grown modestly in the last financial year, as a share of gross national income employee wages have dropped to 48.44 per cent of the total.

Australian Treasurer Josh Frydenberg has toned down hollow bragging lately

Federal Treasurer Josh Frydenberg has toned down his bragging about economic recovery lately, with the Financial Review on 3 September 2019 reporting that:

Treasurer Josh Frydenberg concedes the nation's economic growth for last financial year will be poor but believes activity will pick up in the September quarter because of cuts to income taxes and interest rates.

Fearing a growth number as low as 1.4 per cent for year ending June when GDP figures are released tomorrow, the Treasurer blamed several factors for what will be a sluggish quarter, including the election campaign.

He blames everyone but the federal government of which he is a senior cabinet minister for the following........

On 4 September 2019 the Australian Bureau of Statistics released its 5206.0 - Australian National Accounts: National Income, Expenditure and Product, Jun 2019.

The opening lines of its media release stated: 

The Australian economy grew 0.5 per cent in seasonally adjusted chain volume terms in the June quarter 2019 and 1.4 per cent through the year, according to figures released by the Australian Bureau of Statistics (ABS) today.

Chief Economist for the ABS, Bruce Hockman, said: “The external sector drove GDP growth this quarter, while growth in the domestic economy remains steady”.

The National Accounts release was accompanied by this graph which shows that, despite this June quarter 2019 growth, GDP growth is the lowest it has been in the last eleven June quarters:

And the decline in GDP growth between June 2018 and June 2019 looked like this:

GDP1
Infogram

Interactive graph from https://www.michaelwest.com.au

It is hardly a coincidence that GDP growth  has a sharp downward trajectory, given that once Liberal MP for Cook Scott Morrison became prime minister he spent most of his time between August 2018 & May 2019 in continuous election mode whilst presiding over a virtual policy vacuum.

In June quarter 2019 new and used dwelling investment continued to decline, the household saving ratio fell to the lowest its been since 2008, while the small growth in household consumption was the second lowest its been in the last eleven June quarters. 

Although mining activity picked up, mining gross value added as a percentage of  GDP was almost half of what it was in 2014 and mining investment in dollar terms was the lowest it had been since the June 2011 quarter.

If it wasn't for government expenditure between April and June 2019 then GDP growth would be even slimmer. Even then, neither Prime Minister Morrison nor Treasurer can claim expenditure figures as entirely the result of federal spending because it was state and local governments which did most of the heavy lifting. 

Scott Morrison delivers - but it is not good economic news

This was then Australian Treasurer Scott Morrison in 2016 with blunt warning about a future recession and dip in living standards..... 

The Sydney Morning Herald, 25 August 2016: 

A generation of Australians has never known a recession or high unemployment but unless hard decisions are taken soon, there is a "terrible risk" complacency could end Australia's 25 consecutive years of economic growth, Treasurer Scott Morrison has warned. 

In the first of three "economic headland" speeches the Treasurer will deliver in the coming weeks, designed to set out the budgetary challenges facing the nation - and the government's vision for how to tackle them - Mr Morrison will argue that it should not take an economic crisis to trigger a wake-up call, or restart the economic reform process, so that Australia enjoys a prosperous future. 

In extracts of the speech seen by Fairfax Media, which will be delivered in Sydney on Thursday, Mr Morrison made a simple plea. 

"I do not want my kids to know what a recession is and everything that goes along with that," he will say. 

"I recognise that in the absence of a 'recession we have to have', or the threat of 'becoming a banana republic', achieving necessary change will be more frustrating and more difficult. 

But it is no less necessary, and achieving it this way is far better than the alternative."  

In addition, Mr Morrison will say that on the current settings, a generation of Australians are likely to never pay tax, setting up a new divide - the "taxed and taxed-nots", prompting the Treasurer to ask: "Are we still up to the challenge of doing what we need to do to ensure another 25 years of consecutive economic growth? 

"Do we really appreciate how quickly our economic success can turn, and are we as prepared as we can be to deal with it ... my greatest concern is that we end up answering these questions the hard way." 

This is Australian Prime Minister Scott Morrison in 2019 delivering a fall in living standards and what looks like the beginning of that recession.....

The Australian, 4 September 2019:

The Prime Minister said on Tuesday that the GDP figures would show that Australia is still doing better than many other developed economies.....

“Today’s growth figures will show over the year a softness … what we will see is that in a tough climate we are actually battling away quite well.

The Guardian, 4 September 2019:

Today the government has been madly attempting to spin the GDP figures as good. So let’s cut straight to the point – the figures are terrible and are among the worst we have seen this century. 

But what makes it worse is this government would have us believe they saw them coming. 

How bad are things? Today’s figures show the worst annual economic growth for 18 years. GDP per capita is now lower than it was a year ago, productivity is plunging and the economy is pretty much staying above water purely because of government spending and a drop in imports due to weak investment and household spending. 

And yet these are the figures the treasurer, Josh Frydenberg, would have us believe are evidence of the “resilience of the Australian economy” and which the prime minister, Scott Morrison, said would “come as no surprise to me”. 

If this is how bad things get when the government says it is not being surprised, God help us if they ever get a shock. 

 That trend growth figure is the worst since March 2001. 

We have now had four consecutive quarters of trend growth below 0.5% – that hasn’t happened since the 1990s recession nearly 30 years ago. It is also the first time since the GFC that GDP per capita is lower than it was a year ago.... 

It was little wonder, in his press conference announcing the figures, that the treasurer quickly turned to talking about employment growth compared with the rest of the OECD, because there is not much to boast about on the whole economy side of things. 

Current growth has us in the bottom half of the OECD..... 

The figures also showed, despite the treasurer’s protestations, that living standards are continuing to decline. 

The treasurer suggested that “living standards continue to increase with real net national disposable income per capita rising 1% to be 2.7% higher through the year”. 

But that figure includes all income – both profits and wages. As such, when profits grow strongly due to big increases in export prices, then national income rises. But unless that flows through to households via wages growth, it is pretty meaningless to use it when talking about living standards. 

And we know that the big increase in income is coming from profits – primarily from the mining sector – and it is not flowing through to households. 

When we look at household disposable income we see that it fell not just in the June quarter but over the past year – down more than 1%. Household incomes per capita are currently at the same level they were in real terms in 2010. 

Today’s figures released by the ABS show the economy grew by 0.5% in the June quarter in seasonally adjusted terms and 0.4% in trend terms. Through the year the growth was a truly pathetic 1.4% seasonally adjusted and 1.5% in trend terms. 

Households of course know their living standards are falling, because they are showing it in how they spend their money. In the past year household consumption grew just 1.5% – again the worst result since the GFC..... 

But the treasurer, despite his talking up the figures, knows just how bad they actually are. He even noted that while profits in the mining sector rose 10.6% in the June quarter, in the non-mining sector they “actually fell 0.6%”. 

Because profits in the mining sector have grown so strongly and compensation to employees is growing so weakly, the share of national income going to workers has plunged. 

The last time the share of national income going to workers was this low, the Beatles had just toured Australia.....

Read the full article here.

The Sydney Morning Herald, 6 September 2019: 

“The crisis,” the [Reserve Bank] governor announced at a conference in 2017, “is really in real wage growth.”......

Instead of wages rising at more than 3 per cent a year, as they had in the five years to 2013, the average pay rise since has fallen to 2.2 per cent annually. 

After inflation, the average pay rise has been a scant 0.5 per cent.....

...without higher wages to pay for people’s groceries, medical care, homes and holidays, spending is weak and the economy enfeebled. 

Lowe has urged governments, state and federal, to lead the way, breaking their 2.5 per cent annual limits and paying workers more.

Then there is this headline demonstrating the folly of Liberal-National ideology......

Former failed advertising executive and Institute of Public Affairs adherent Scott Morrison clearly missing the point entirely.

Morrison, McCormack, Frydenberg & Co are hugging their projected budget surplus so tightly they are strangling the national economy.

Yet more opinions that the 46th Australian Government - the Morrison Government - will not end well for the nation

The Australian: Morrison Government Ministry 2019

The Monthly, 9 July 2019:

As Australia’s economy falters, the government’s fiscal heart is hardening, not softening. Treasurer Josh Frydenberg’s determination to deliver his much-vaunted budget surplus for 2019–20 and retain Australia’s AAA credit rating – which is hardly in danger – is of a piece with junior minister Luke Howarth telling the homeless to look on the bright side. In prospect is more of the same punishing austerity towards anyone doing it tough; it’s the flipside of celebrating those who aspire and get ahead, and who are rewarded with taxpayer largesse through subsidies and tax loopholes. Last week’s $158 billion tax-cut package is going to accelerate the trend to an increasingly unequal Australia, which has resulted from the Coalition’s agenda since it was elected in 2013. As former treasurer Joe Hockey said when defending his first budget, the worst-received in living memory: “Governments have never been able to achieve equality of outcomes … It is not the role of government to use the taxation and welfare system as a tool to ‘level the playing field’”.

Flanked by his assistant minister, Michael Sukkar, and the tax commissioner, Chris Jordan, Frydenberg today announced [$] that more than 810,000 Australians had already filed their 2018–19 tax returns and could be receiving their rebates of up to $1080 by the weekend. But, resisting calls from the Reserve Bank governor, Philip Lowe, he stressed that there would be no further stimulus, citing the “non-negotiable” imperative of reaching a budget surplus this year, and saying that the government would be focused on reducing debt….

Doing the same thing over and over while hoping for a different result is clearly not working. Today’s NAB business confidence survey showed that the post-election bounce has been short-lived, and the first of the RBA’s two recent rate cuts has failed to improve conditions. A small uptick in employment growth is positive, but NAB’s chief economist, Alan Oster, says the overall decrease in business conditions has been “relatively broad-based across states and industries – suggesting that there has been sector-wide loss of momentum over the past year”. The share market is jumpy, selling off sharply today as APRA, in a sign of nervousness, lowered its capital requirements for banks, and bond markets are reportedly “screaming economic downturn”…..

The Saturday Paper, editorial, 6 July 2019:

And so it passes, the greatest assault on the safety net from which Australian life is built. Scott Morrison’s tax cuts are through and the revenue base that provides for health and education and social welfare is shredded. The legacy of the 46th parliament is there in its very first week: the destruction of the social compact that made this country stable.

On analysis by the Grattan Institute, to pay for these cuts at least $40 billion a year will need to be trimmed from government spending by 2030. The Coalition argues it will not cut services. It says jobs growth will reduce spending on welfare. A surplus will mean less interest paid on debt.

The assumptions are heroic and unsustainable. They show an extraordinary indifference to reality. More than that, they are indifferent to need. People will be worse off under these cuts. They will face greater hardship, have less access to health and to quality education. The people worst affected did not vote for Scott Morrison. Half the country didn’t. The damage done is near irreversible. It is infinitely easier to cut taxes than to raise them. This is a triumph of greed and political cowardice. The Labor Party waved it through.

The principles of this policy were first written on a paper napkin in 1974, when the conservative economist Arthur Laffer sketched out his famous tax curve for Dick Cheney and Donald Rumsfeld. That serviette is one of the most pernicious documents in modern politics. It made the case for what became trickle-down economics. It became the lie through which governments gave money to the rich and pretended they were helping the poor.

The year Scott Morrison became treasurer, the Australian Chamber of Commerce and Industry brought Laffer to Australia for a speaking tour. He met with Josh Frydenberg. His doctrine has its most explicit contemporary expression in the cuts passed this week…...

In his first major speech as prime minister, Morrison said he didn’t believe people should be taxed more to improve the lives of others. He said people had to work for it: they had to have a go. “I think that’s what fairness means in this country,” he said. “It’s not about everybody getting the same thing. If you put in, you get to take out, and you get to keep more of what you earn.”

This is a fundamental misunderstanding of the purpose of taxation. You don’t pay tax in exchange for services. You pay tax for a society. Under Morrison, you pay less tax and you have less society. The obliterating self-interest of this week will be felt for generations. Morrison’s victory is a huge, huge loss.

A word or two on the Australian economy…….

“The financial year ending in 24 days will be recorded as Australia’s worst since 1992, when the nation was struggling to recover from the 1991 recession.”  [Contributing Editor Michael Pascoe, The New Daily, 5 June 2019]

With wages growth stagnant and a rise in unemployment the slowing economy became even slower last month as consumers kept their wallets closed, perhaps sensing the uncertainty behind Prime Minister Scott 'Liar  from the Shire' Morrison's empty brag of a strong economy during the recent federal election campaign.

Australian Treasurer and Liberal MP for Kooyong Josh Frydenberg let the cat out of the bag when speaking with the banks ahead of the 4 June 2019 Reserve Bank official cash rate cut when he was variously reported as admitting the economy faced significant problems or domestic and international economic challenges.  A few days later it was factors which weighed on the economy.

Here is how mainstream media and statisticians presented the situation........

The Age, 2 June 2019:

On the basis of the December quarter numbers Australia is already in a recession on a per capita basis. It has been there before in its record-setting period of economic expansion, but there is a sense this time that it will be lucky to avoid a contraction.

Slowing economic trends are unlikely to have reversed in the first quarter of 2019. We haven’t seen those March quarter numbers yet, but they are unlikely to be good, and may be bad. Political uncertainties will not have helped.

What is in prospect is the sort of outcome that will compound the concerning result in the second half of 2018 when GDP slowed dramatically to 1 percent year-on-year.

If that slowdown becomes entrenched, Australia will tip into a recession for the first time in a generation with all the consequences that will follow. This includes an indelible political context.

After six years in office, the Coalition cannot reasonably blame its predecessor for tepid wages growth, weak productivity gains, spiralling household debt, a doubling of net government debt, and a depreciation of the Australian dollar by about 30 per cent since a Tony Abbott-led government took office in 2013.

Interest rate cuts may further weaken the dollar. This would be good for commodities exporters, bad for consumers.

A booming property sector fuelled by easy credit and lax Foreign Investment Review Board strictures on Chinese money flooding the market contributed to an illusion of wellbeing, the so-called wealth effect: or, perhaps, better described as the “wealth illusion’’.

Cuts to interest rates may give the economy a bump. The removal of the spectre of a Labor government, at odds with aspirational Australia, may encourage investment.

However, what should be concerning the government, as it prepares for the first session of the 46th parliament in early July, is that unemployment in April ticked up to 5.2 per cent from 5 per cent, and underemployment jumped to 8.5 per cent.

Finally, this brings us to Treasurer Josh Frydenberg’s pledge to bring the budget back into surplus in 2020-21 and begin paying down debt. If a recession bites that undertaking will not be worth the budget papers on which it is written.

The question will then become whether - and how quickly - the Morrison government can bring itself to admit its budgetary projections, reaffirmed by a docile Treasury in its pre-election economic and fiscal outlook (PEFO), misfired.

Rather than surpluses as far the eye can see and tax cuts on the horizon it would be dealing with an entirely different scenario.

What would be needed in that case is real stimulus for capital works projects rather than short-term fixes in the form of tax cuts that might be good for the sale of Harvey Norman flat-screen televisions, but will do little for wages growth or the economy overall.

Australian Bureau of Statistics (ABS), media release, 4 June 2019:

Retail turnover fell 0.1 per cent in April

Australian retail turnover fell 0.1 per cent in April 2019, seasonally adjusted, according to the latest Australian Bureau of Statistics (ABS) Retail Trade figures.

This follows a rise of 0.3 per cent in March 2019.

"There were mixed results across industries" said Ben Faulkner, ABS Director of Quarterly Economy Wide Surveys, "with falls in Household goods retailing (-0.9 per cent), Cafes, restaurant and takeaway food services (-0.7 per cent), and Clothing, footwear and personal accessory retailing (-1.2 per cent), which were offset by rises in Other retailing (0.8 per cent), Department stores (1.8 per cent), and Food retailing (0.2 per cent)."

In seasonally adjusted terms, there were falls in New South Wales (-0.4 per cent), Victoria (-0.4 per cent), the Northern Territory (-0.5 per cent), and the Australian Capital Territory (-0.2 per cent). There were rises in Queensland (0.7 per cent), South Australia (0.6 per cent), Western Australia (0.1 per cent), and Tasmania (0.3 per cent).

The trend estimate for Australian retail turnover rose 0.2 per cent in April 2019, following a 0.2 per cent rise in March 2019. Compared to April 2018, the trend estimate rose 2.9 per cent.

Online retail turnover contributed 5.7 per cent to total retail turnover in original terms in April 2019, which was unchanged from March 2019. In April 2018, online retail turnover contributed 5.4 per cent to total retail.

More detailed industry analysis and further information on the statistical methodology is available in Retail Trade, Australia (cat no. 8501.0).

Reserve Bank of Australia. media release, 4 June 2019:

Statement by Philip Lowe, Governor: Monetary Policy Decision

At its meeting today, the Board decided to lower the cash rate by 25 basis points to 1.25 per cent. The Board took this decision to support employment growth and provide greater confidence that inflation will be consistent with the medium-term target.

The outlook for the global economy remains reasonable, although the downside risks stemming from the trade disputes have increased. Growth in international trade remains weak and the increased uncertainty is affecting investment intentions in a number of countries. In China, the authorities have taken steps to support the economy, while addressing risks in the financial system. In most advanced economies, inflation remains subdued, unemployment rates are low and wages growth has picked up.

Global financial conditions remain accommodative. Long-term bond yields and risk premiums are low. In Australia, long-term bond yields are at historically low levels. Bank funding costs have also declined further, with money-market spreads having fully reversed the increases that took place last year. The Australian dollar has depreciated a little over the past few months and is at the low end of its narrow range of recent times.

The central scenario remains for the Australian economy to grow by around 2¾ per cent in 2019 and 2020. This outlook is supported by increased investment in infrastructure and a pick-up in activity in the resources sector, partly in response to an increase in the prices of Australia's exports. The main domestic uncertainty continues to be the outlook for household consumption, which is being affected by a protracted period of low income growth and declining housing prices. Some pick-up in growth in household disposable income is expected and this should support consumption.

Employment growth has been strong over the past year, labour force participation has been increasing, the vacancy rate remains high and there are reports of skills shortages in some areas. Despite these developments, there has been little further inroads into the spare capacity in the labour market of late. The unemployment rate had been steady at around 5 per cent for some months, but ticked up to 5.2 per cent in April. The strong employment growth over the past year or so has led to a pick-up in wages growth in the private sector, although overall wages growth remains low. A further gradual lift in wages growth is expected and this would be a welcome development. Taken together, these labour market outcomes suggest that the Australian economy can sustain a lower rate of unemployment.

The recent inflation outcomes have been lower than expected and suggest subdued inflationary pressures across much of the economy. Inflation is still however anticipated to pick up, and will be boosted in the June quarter by increases in petrol prices. The central scenario remains for underlying inflation to be 1¾ per cent this year, 2 per cent in 2020 and a little higher after that.

The adjustment in established housing markets is continuing, after the earlier large run-up in prices in some cities. Conditions remain soft, although in some markets the rate of price decline has slowed and auction clearance rates have increased. Growth in housing credit has also stabilised recently. Credit conditions have been tightened and the demand for credit by investors has been subdued for some time. Mortgage rates remain low and there is strong competition for borrowers of high credit quality.

Today's decision to lower the cash rate will help make further inroads into the spare capacity in the economy. It will assist with faster progress in reducing unemployment and achieve more assured progress towards the inflation target. The Board will continue to monitor developments in the labour market closely and adjust monetary policy to support sustainable growth in the economy and the achievement of the inflation target over time.