From the Monthly economic update:
Since our forecasts were finalised, our tracking of March quarter data including retail sales volumes, suggest March quarter real GDP growth may fall short of the 0.7% Budget Economic and Fiscal Update (BEFU) 2018 forecast.
The update is relatively upbeat, but there is that warning (above)
More:
increased government spending and higher net migration provide more support for growth in later years.
June quarter activity indicators have been a little more positive
- April milk production at record levels
- April export values posting a solid gain on the back of higher volumes
On the other hand, domestic petrol prices rose to records highs in some regions in May as international oil markets reacted to tighter supply, reducing household's discretionary expenditure.
In the labour market,
- employment continued to grow at a solid pace in the March quarter
- unemployment rate fell to 4.4%, down from 4.9% at the March quarter last year
- wage inflation has yet to show a convincing pick up
- Subdued wage pressures are contributing to low inflation and expectations that the Reserve Bank will keep the Official Cash Rate at 1.75% for some time to come.
International developments
- risks are skewed to moderately weaker global growth in 2018 than in BEFU 2018
- Growth in Japan, the Eurozone, and the UK slowed down in the first quarter this year
- Political instability in Italy is likely to slow growth in the euro area further
- The outlook for China and the US remains relatively positive
From the Treasury's Monthly Economic Indicators May 2018
