Thursday: Australian GDP Growth Slows

The latest Australian economic snapshot shows quarterly GDP flatlining at 0% after a modest 0.2% revision in December, while annual growth steadies at 2.5%. Real, inflation‑adjusted household incomes slipped in Q1, dragging discretionary spending to a meager 0.1% rise. Combined with weak consumer confidence, these trends reinforce ANZ’s view that the Reserve Bank of Australia will keep the cash rate on hold at 4.35% until clearer consumption signals emerge. Meanwhile, U.S. services PMI outperformed expectations, yet employment softness and record‑high price levels keep the Federal Reserve on a prolonged pause.

In New Zealand, residential building consents surged 11% in April, driven largely by apartment approvals, but analysts warn the momentum may fade as higher rates and a flattening property market take hold. Merchandise terms of trade dipped 2% in the March quarter after dairy export prices fell, although overall terms remain elevated from the previous record high. The lingering effects of the Middle East conflict are expected to surface in import price pressures later this year, adding another layer of uncertainty for the region’s export‑dependent economy.

ANZ’s head of agribusiness, Mark Bennett, highlighted how the Middle East turmoil has strained key agricultural inputs. Australia imports roughly $5.5 billion AUD (about $3.6 billion USD) of fertiliser each year; prices spiked dramatically before moderating, leaving a high‑cost structure for growers. Despite supply holding up for the current planting season, future nitrogen and phosphate needs remain a concern. Global grain markets are tight, with lower expected tonnages from Australia, the United States and Russia supporting wheat, canola and barley prices. Weather outlooks—particularly reduced rainfall on the East Coast—will further shape the profitability of Australia’s cropping sector this year.