The latest batch of figures seems to confirm that the economy grew in the early months of this year, but only at a plodding pace unlikely to add any pep to the jobs market.
Over the long haul, the economy’s output of goods and services has risen by an average of about 3.2 per cent or about 0.8 per cent a quarter.
Given current trends in the population and labour productivity, something around that ought to be achievable in the years ahead.
But the economy hasn’t managed it since the first quarter of last year.
The results can be seen in the gradual upward creep of the unemployment rate.
An AAP survey last week showed economists generally expect a rise of about 0.8 per cent in the March quarter – a return to “trend” – to be revealed when the Australian Bureau of Statistics (ABS) publishes its national accounts on Wednesday.
But the bureau’s data releases on Monday – its estimate of business inventory growth, along with company profits and other income measures – warn against optimism.
The figures show business inventories fell in the March quarter after rising the quarter before.
The cut in production devoted to inventory-building works out to somewhere between 0.3 and 0.4 per cent of GDP.
And that’s the size of what economists call the “negative contribution to economic growth” made by inventory accumulation in the quarter.
It means a significant chunk of the surge in retail sales already reported by the bureau and whatever growth came from exports – to be revealed by ABS data on Tuesday – came from inventories rather than new production.
On the income side, company profits rose by 3.4 per cent, according to the numbers on Monday.
But profits made by unincorporated businesses grew by less and wage income barely grew at all.
Combined, these measures of income rose by only 1.4 per cent, and that’s before allowing for inflation.
Taking that into account, a real-terms GDP rise of less than one per cent and more likely closer to 0.5 per cent seems likely.
So this points to a probable “below trend” result for GDP growth on Wednesday.
These figures don’t provide all the pieces of the GDP jigsaw puzzle.
The missing prices always have the potential to surprise by lifting GDP growth above expectations or dragging it below.
But the way things look at the moment, a “trend” rise in GDP looks to be at the optimistic end of the range of plausible outcomes.
The upshot of that is that jobs growth is also likely to continue to be below trend, with the upward drift of the unemployment rate set to continue for a while yet.
