Nominal GDP growth is holding up well. The broadest measure of income across the economy is nominal GDP. It is effectively the tax base. So the relatively firm growth in income tax revenues through QI points to relative firm growth in QI nominal GDP.
Jobs growth may be stronger than the official data suggests. Growth in PAYG revenues remains strong. These revenues are typically correlated with the strength or otherwise of the labour market. Elevated PAYG growth rates are not consistent with the flat trend in jobs growth. They are consistent with the flat-to-down trend in unemployment. They are also consistent with a labour market near full employment.
Trend-type growth in nominal consumer spending continues. GST revenue trends should follow consumer spending (or at least that part subject to the GST). Variations in GST growth are greater than for consumer spending so the direction of GST flows is probably the more important signal than the size of the move. The flat momentum in GST growth in QI suggests that nominal consumer spending growth continued at a reasonable clip. The pickup in retail trade growth in the last few months is consistent with this outcome.
The momentum behind wages growth is not showing any sign of slowing. Growth in the net income tax paid by individuals is a useful pointer to the direction of wages growth. QI flows suggest some upside risk to earnings growth. This risk sits at odds with RBA inflation forecasts based on a “judgement” that wages growth will slow.
