The good, the bad and the ugly of Australia’s latest economic indicators, in 7 graphs

Australia’s inflation rate has ended its 15-month fall, ticking up from 3.6 per cent to 3.8 per cent for the June quarter.

Although remaining above the Reserve Bank’s target band of 2-3 per cent, the rate is in line with Reserve Bank and market expectations, minimising concerns of impending rate rises.

The good

The latest data from Xero’s Small Business Index also shows strong growth in hiring in small business, with jobs rising an average of 4.5 per cent year-on-year for the June quarter, while the 5 per cent monthly rise recorded in June was the largest rise since October 2022.

The headline figures, however, obscure pockets of pain. For instance, jobs growth was particularly strong in public administration and healthcare, rising around 9 per cent for the quarter for each. Hospitality recorded the first rise in jobs for the year, although they remain half a per cent below where they were in June last year.

The bad

Xero’s index shows mounting weakness across most industries, with falling sales growth in June almost across the board. The only exceptions were sectors heavily dependent upon government spending, like healthcare and education.

Xero economist Louise Southall said the continued jobs growth was positive to see.

“However, the decline in sales in June is something to watch,” she said.

“Softening wages growth suggests small businesses may be managing the jobs and sales mismatch by offering smaller pay rises to employees.”

Indeed, Xero’s figures show wages growth in the June quarter averaged just 2.9 per cent, down almost half a percentage point from the March quarter. With inflation close to 4 per cent, this keeps small businesses wages in real decline.

The risk for small businesses here is not being able to keep up with wage rises being offered by larger businesses or the public sector.

The ugly

The latest ABS data also shows serious pain in the housing market, with rents rising by more than 7 per cent in the quarter for the fourth time in a row.

The pain is particularly acute in Western Australia, which has recorded double digit annual increases in both rents and new dwelling prices.