FXstreet.com (Barcelona) - The Australian economy shows every sign of continuing its growth at a moderate pace, despite official data suggesting that GDP growth was reasonably solid in Q2, at perhaps 0.8%. Retail trade volumes grew by 1.4% and net exports appear to have made a solid contribution. When combined with the strong growth recorded in Q1, the official data may be pointing to annual GDP growth not much shy of 4%.

However according to the NAB Analyst Team, “business and consumer sentiment remain below trend and conditions are very weak across a wide segment of industry – forward orders and building approvals are disturbingly soft in construction, manufacturing continues to shed jobs and the nascent recovery in retailing appeared to take a backward step in July.” Property markets are still drifting and inbound tourism continues to wilt under the relentless strength of the AUD. “Weaker prices for bulk commodities seem to be contributing to softer conditions in mining where there are increasing reports of project deferrals.” they add.

The latest NAB survey suggests the Australian economy continues to grow at a modest rate. Of particular concern is the trend decline in capacity utilization – largely reflecting rising spare capacity in the manufacturing sector – as well as relatively subdued levels of forward orders, stocks and employment conditions.