Problem that’s causing recession concerns
A strong jobs market has helped keep Australia free of recession for nearly 30 years despite productivity taking a turn for the worst, a new report has revealed.
The Productivity Commission's new report, Productivity Insights February 2020 released today, showed strong trade has enabled incomes to outgrow productivity over the past two decades.
The report highlights Australia's recession-free running streak spanning 28 years and said it's "a record that is the envy of policymakers" worldwide.
It said Australians have not experienced a recession since the 1990-91 financial year which is before about 40 per cent of the Australian population was born.
However it also explains the slide in the nation's productivity has happened for the first time since the mining boom.
The report said, "sustained weakness in productivity data is rightly cause for concern".
Labour productivity and multifactor productivity dropped in 2018-19 by 0.2 and 0.4 per cent respectively, coinciding with similar productivity slowdowns in other advanced economies since 2005.
The report found wages growth have been weak since 2012-13, for reasons including slowing labour productivity growth, consumer price inflation outpacing producer price inflation and the labour share of income continuing its decline.
It showed there has been favourable changes to the price of Australians exports, allowing the economy to sustain strong growth in incomes despite weak productivity.
This has allowed the volumes of goods to be increased that Australians can consume which includes imports by selling what they produce.