Bernard Hickey: A disconcerting state

Photo / Herald on Sunday

This has certainly been the winter of our discontent.

Paul Holmes captured the zeitgeist last weekend when he said the economy appeared to be grinding to a halt, and his intuition is backed up by at least 10 sets of economic data.

* Retail sales are weak because consumers are opting to repay debt rather than keep spending.

* House sales are flat to falling, as are house prices. The tax changes in the Budget, a 0.5 per cent rise in floating mortgage rates and weak lending growth have dampened activity.

* Bank lending growth has slowed dramatically in the last two years and is now dribbling along at subsistence levels. Home lending grew just $112 million in June from May, well below the extra $1.5 billion the banks were lending every month through much of 2006 and 2007.

* Manufacturing began contracting again in July for the first time in 14 months, and new orders fell sharply.

* Employment fell 6000 in the June quarter and unemployment rose 19,000 to 159,000, surprising many.

* Business confidence fell in July for the third month running. A weak housing market and manufacturing sector, rising interest rates and the weak global outlook are all impacting.

The economy may not have ground to a halt, but it has stopped growing quickly.