Economic growing pains not such a pain

By Keri Algar

SYDNEY, NSW: Retailers will be pleased to know that while the hiatus on rates might not be tipped to extend into October, a stabilisation of economic growth has been forecast, according to a report which predicts the likely pace of economic activity.

The Westpac–Melbourne Institute Leading Index indicates that the peak growth period for 2010 has passed, reaching a growth rate of 6.8 per cent in June above the long term trend of 3.2 per cent.

"This is the fourth consecutive month when the growth rate of the Index has slowed. In absolute terms the growth rate of the Index is still high but it has clearly peaked. The growth rate of the Index is still consistent with a faster pace of growth in the economy than Westpac expects,” said Bill Evans, Westpac chief economist.

That a peak period has passed is not altogether bad news for retailers as the principle retail period of the year approaches and consumer spending is swayed by promotions, work bonuses and holiday cheer.

On a similar note, an Access Economics analysis reported earlier this month that retail sales will grow by a firm 3.2 per cent in 2010 to 2011, lifting to 3.7 per cent in 2011 and 2012 – propelled by the next housing construction peak.

This report also warned, however, that consistent sales growth in the months ahead would eventually be undermined by a decline in population growth.

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