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Consumer spending figures 'point to economic slowdown'

Consumer spending figures 'point to economic slowdown'

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Date Published : Thursday, July 31, 2008

The latest consumer spending figures from the Australian Bureau of Statistics (ABS) indicate the economic is undergoing a "marked slowdown" in growth, according to reports.

The report, cited by the Canberra Times, shows shoppers spent more than $20 billion in June - resulting in the retail sector growing by one per cent that month, the weakest rate of growth since 2002.

Furthermore, the ABS said, over the three months to June, retail trade dropped off by 0.6 per cent, compared to a decline of 0.1 per cent for the previous quarter.

The quarterly figure was also worse than many analysts' projections, the site said. Economists had predicted a drop in growth of 0.2 per cent for the second quarter of 2008.

In addition to the ABS outlook on spending, recent figures from the Reserve Bank of Australia (RBA) show high interest rates are constricting demand for credit.

Overall, the Australian credit market grew by 0.4 per cent in June, the site said. Home loans were up by 0.6 per cent, while growth in other forms of personal credit - such as personal loans and credit cards - stood at 0.6 per cent.

According to the Times, the figures could shore up speculation among economists that the RBA will cut interest rates later in the year.

The base rate of interest currently stands at 7.25 per cent. The last time the Reserve Bank adjusted the rate was when it approved a 0.25 per cent increase in March.

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