GDP figures released this week showed the Australian economy grew 1.1% in the first quarter

GDP figures released this week showed the Australian economy grew 1.1% in the first quarter. The better-than-expected figure driven by a surge in coal and iron ore exports. We believe the latest GDP figure paints an overly optimistic picture of the economy. In reality a number of sectors are flagging, including retailing and housing. Based on anecdotal evidence we've gathered in our recent discussions with retail industry contacts, consumer spending evaporated in the lead-up to the Federal Budget. This has been reflected in a slew of profit downgrades from retailers recently including Noni B and RCG Corporation. May data shows house prices fell for the first time in a year, down 1.9% - the greatest monthly fall since the GFC. Our research tells us that the second quarter GDP figures out in September will be weaker reflecting the current challenging economic conditions. Register at (VIEW LINK) for our weekly note.