July is here and the good news is that the shortest day and longest night are behind us. It’s also the start of the new financial year which is always a good time to reflect on your financial progress over the past 12 months and plan your strategy for the year ahead.
Australia’s economic performance defied the odds in the 2016-17 financial year, notching up more than 25 years without a recession – a global first. Annual economic growth eased from 2.4 per cent to 1.7 per cent in the March quarter, reflecting the unwinding of the mining boom, adverse weather events and geopolitical instability. Consumer confidence also eased as annual wages growth slowed to around 2 per cent, just above the annual inflation rate of 1.7 per cent. The ANZ/Roy Morgan consumer confidence rating fell 4.3 per cent over the year to 111.8 at the end of June. However, there are positive signs for the future with home building at record levels, infrastructure spending on the rise across the country and unemployment at 4-year lows, down from 5.7 per cent to 5.5 per cent in May.
Local investors also have reason to celebrate, with Australian shares up close to 13 per cent in the year to June, their best performance in three years. The Aussie dollar has traded within a narrow band between US72c and US78c all year, to close around US76c. The cash rate remains at a record low of 1.5 per cent and while the Reserve Bank appears content to sit on the sidelines for now, most commentators expect the next move will be a modest rate rise. in at the lower end of the Reserve Bank’s 2-3 per cent target band, due to a soft jobs market and low wages growth.
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