Continuing contraction in manufacturing, weak retail sales and a steep fall in job advertisements are set to weigh on the Reserve Bank of Australia's rate decision due on Tuesday.
However, economists say soft data will not be enough to trigger another rate cut tomorrow. The bank is widely expected to keep its rate steady at a record low 2.75 percent.
At the May meeting, the RBA reduced rates by 25 basis points from 3.00 percent. The central bank started its easing cycle in November 2011 and has reduced the rate by a cumulative 200 basis points since then.
According to the Australian Industry Group survey, the manufacturing activity remained in negative territory with no sub-sector expanding in May.
Mirroring weak consumer demand, retail sales grew at a slower than expected pace in April on a marked contraction in department store sales, data from the Australian Bureau of Statistics revealed today.
Other official data suggested that the mining sector continues to underpin economic growth. Company profits rebounded in the March quarter as global commodity prices boosted mining profits.
Overall profits advanced 3 percent in the first three months, which was the biggest growth since September 2011. The sequential growth reversed the 0.5 percent fall in the quarter ended December and exceeded the 1.5 percent expected expansion.
Job advertisements declined for the third consecutive month in May, a report from the ANZ bank revealed today. Ads were down 2.4 percent month-on-month in May, after easing 1.7 percent in April, to the lowest level so far this cycle.
Although ANZ Chief Economist Ivan Colhoun forecasts no change in interest rates when RBA meets next, the economist continues to expect that the next move in interest rates will be a further cut, driven by a likely continuing rise in unemployment as signaled by the declining trend for job advertising.
Despite an improvement in the manufacturing activity index in May, the malaise in the sector continued with the performance of manufacturing index remaining below the 50 level which separates expansion from contraction, the Australian Industry Group said. The latest Australian PMI rose 7.1 points to 43.8 points in May.
Further today, the Australian Bureau of Statistics said retail sales grew 0.2 percent month-on-month in April after easing 0.4 percent in March. But the rate of growth was slightly weaker than the 0.3 percent rise expected by economists.
Tom Kennedy at J.P. Morgan expects recent weakness in the confidence measures indicate consumers are likely to remain cautious.
Department store sales declined 2 percent and household goods retailing slipped 0.6 percent. However, about 1.8 percent rise in clothing and footwear and a 0.5 percent increase in food retailing underpinned overall turnover.
Further, boosting hopes that consumers might spend more in the month ahead, monthly inflation gauge published by TD Securities - Melbourne Institute showed signs of easing price pressure. The inflation gauge increased 0.2 percent in May, following a rise of 0.3 percent in April.
"The ongoing low inflation environment certainly allows for further easing should that prove to be necessary, a conclusion we expect to be repeated tomorrow, but the six-cent fall in the Australian dollar since the May Board meeting removes the urgency for near-term action," said Annette Beacher, head of Asia-Pacific research at TD Securities. Beacher believes the case for 'wait and see' is strong."
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April 24, 2026 15:15 ET Economics news flow was relatively light this week even as the conflict in the Middle East continued, raising concerns for policymakers. In the U.S., spending data, initial jobless claims and pending home sales were the highlights. Business confidence in the biggest euro area economy was in focus in Europe. Inflation data from Japan gained attention in Asia.