Week in review

• Australia 1Q ‘25 real GDP 0.2% q/q, 1.3% y/y
• ECB cut rates by 25bps to 2.25%
• Eurozone CPI inflation 1.9% for May

Week ahead

• China CPI inflation
• Australia business and consumer confidence
• U.S. CPI inflation

Thought of the week

The Australian economy fell short of expectations in the first quarter of the year, partly due to weather-related disruptions. The severe weather, impacted coal and LNG exports and dampened household consumption, which remains below the pre-pandemic trend. The household savings rate rose by 1.3 percentage points to 5.2%, driven by increased income support and insurance claims linked to the floods. This rise is unlikely to continue, reflecting one-off factors rather than a sustained trend. A continued rise in the savings rate would suggest a decline in consumption. Still, the anticipated rebound in household consumption has been slow to materialise, suggesting a cautious growth outlook. The RBA's shift to a more dovish stance in May, amid reduced inflation concerns, and the softer growth figures add fuel to the argument for another rate cut next month.

A little more for a rainy day

Household savings rate, percent of household disposable income

Source: ABS, FactSet, J.P. Morgan Asset Management. Data reflect most recently available as of 06/06/25. 

All returns in local currency unless otherwise stated.
Equity price levels and returns: Levels are prices and returns represent total returns for stated period.
Bond yields and returns: Yields are yield to maturity for government bonds and yield to worst for corporate bonds. All returns represent total returns. AusBond Comp is the AusBond Composite 0+ Yr, AusBond IG is the AusBond Credit 0+ Yr both provided by Bloomberg.
Currencies: All cross rates are against the Australian dollar. An appreciation of the foreign currency against the Australian dollar would be positive and a depreciation of the foreign currency against the Australian dollar would be negative.

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