Reserve Bank of Australia sounds not so optimistic

Extracts from its Statement on Monetary Policy

February 2015

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•  Growth of economic activity appears to have been a bit below average in the second half of 2014.
•  A range of indicators suggest that consumer spending increased at a moderate pace in the December quarter, while indicators of dwelling investment remain at high levels.
• Mining investment is expected to have declined further, while exports continued to expand.
•  Survey measures suggest that business conditions and capacity utilisation have remained around average.
• The decline in commodity prices will have reduced resource sector profits and growth of labour income is likely to have remained weak.
• A number of indicators suggest that conditions remained soft in the labour market, consistent with a continuation of below-trend growth in economic activity.
• Although employment growth picked up, spare capacity continued to increase over 2014. In particular, the unemployment rate increased gradually, continuing its trend of the past few years.
• Falls in mining investment detracted significantly from overall growth, although this was offset by a strong increase in resource exports.
• While growth in non-mining activity has picked up a little over the past two years, all components except dwelling investment look to have grown at a below average pace over the past year.
• While the key forces shaping the forecasts remain much as they were, the forecasts for GDP growth over the coming quarters are a bit lower than those presented in the November Statement  . 
• GDP growth is now expected to remain below trend over the course of this year and then to pick up to an above-trend pace in the latter part of the forecast period, in response to rapid growth in LNG exports and the lower exchange rate and interest rates.

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Output Growth  Year-ended Forecast by RBA	Per cent
Dec 2014	2½
June 2015	2¼
Dec 2015	2¼–3¼

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