Another Bad Report Card for Australia's Economy Adds to the Pile
(Bloomberg) -- Australia’s workplace productivity growth has slowed to a crawl as the economy struggles to shake off the drag from the end of its mining investment boom earlier in the decade.
The labor productivity rate declined to 0.4% in year through June 2018, compared with an average of 2.2% since the mid-1970s, the Productivity Commission, a government advisory body, said in a report Tuesday.
“The current weakness in labor productivity can be partly attributed to a marked slowdown in investment in capital,” the commission said. “This is troubling because investment typically embodies new technologies, which complement people’s skill development and innovation.”
The report adds to a litany of data that shows Australia’s economy struggling, with stagnant wages, falling home prices and record household debt weighing on an expansion now deep into its 28th year. The Reserve Bank will likely cut interest rates Tuesday for the first time since 2016, while an escalating trade war between security ally the U.S. and key trading partner China further complicates the outlook.
In the mining industry, labor productivity has swung from 4.6% growth in fiscal 2016 to a 0.4% decline within just two years. Other sectors slowing include drought-affected agriculture, forestry and fishing (-12%), arts and recreation (-7.4%), and electricity, gas, water and waste (-4.5%).
Sectors performing well in the past fiscal year include administrative services (8.2% growth), finance and insurance (6.9%) and professional services (4.1%).
Overall, it’s not all bad -- Australia is still performing well in maintaining productivity levels when compared with other developed economies. Since 2001, it has outperformed all G-7 nations except the U.S., the report said.
“Notwithstanding recent mediocre productivity growth, Australia has a high level of productivity compared with many economies and, as a result, a high standard of living by international standards.”
©2019 Bloomberg L.P.