KEY POINTS:
Official confirmation that the economy was in recession in the first half of the year comes as no surprise and any faint comfort from the fact that the 0.2 per cent contraction for the June quarter was slightly less than most forecasts soon evaporates.
Manufacturing activity was stronger than expected but that is probably explained by increased slaughtering of sheep and cattle as a result of the drought.
Some of the economy's output has simply gone into swollen inventories. The expenditure measure of GDP was softer than the production measure. It shrank 0.5 per cent.
At first glance business investment was robust, up 6.1 per cent in the quarter, but when an oil rig and associated kit are removed investment in plant and machinery was "pretty flat", the statisticians said. So not much joy for future growth potential there.
Today's numbers reflect the state of the economy three to six months ago. Most forecasters expect the September quarter to be negative as well.
The combined effect of lower oil prices, lower interest rates and tax cuts should see a return to growth in the December quarter. But how strong or feeble the recovery proves to be will depend above all on the extent to which credit is constrained by events offshore.
