Fresh warning bell for Aussie economy
The Australian Bureau of Statistics revealed the dip in its latest data release on business turnover, which covers total income generated from sales before taking out expenses.
A slump in arts and recreation services propelled the decline, with the category tumbling 5.5 per cent over the month.
Manufacturing declined 1.3 per cent and retail slipped 0.8 per cent.
Altogether, turnover in five of 13 industries fell.
'This is the first fall in monthly business turnover since October 2024,' ABS head of business statistics Robert Ewing said.
'Softening the fall, we saw rises in electricity, gas, water and waste services, up 1.7 per cent, and wholesale trade, up 1.1 per cent.'
IG market analyst Tony Sycamore said May's numbers suggested Australia's economy had entered a 'flat patch'.
'It supports other data that indicates the economy remains in a flat patch, with the softness in retail sales confirming the idea that households remain cautious,' he said. Business turnover declined across May 2025. NewsWire / Nikki Short Credit: News Corp Australia
'This reinforces the need for additional monetary policy easing from the RBA (Reserve Bank of Australia) to boost sentiment and growth prospects for the Australian economy into the end of 2025.'
Compared with May 2024, however, overall turnover was 3.3 per cent higher for the month, the ABS said.
May's dip follows a shock decision from the RBA on Tuesday to hold the cash rate at 3.85 per cent, defying expectations from expert commentators and the money markets.
RBA governor Michele Bullock wanted to wait for the June quarter inflation numbers – scheduled for release on July 20 – before moving on rates.
'We just want to confirm with a full quarterly CPI that we're still on track to deliver inflation continuing down to the middle of the band over time,' she said in response to a question from NewsWire.
'That's the reason we're waiting. We decided to hold and we'll reconsider again in August with this extra information and new forecasts.'
bRight Agent co-founder Aaron Scott called the hold a 'cruel blow' for millions of Australian homeowners.
'Despite the fact that a July cut would not have been enough to give most mortgage holders a meaningful reprieve, it would have been welcome by the millions of Aussies who are holding out for more cost-of-living relief,' he said on Tuesday.
'Nobody will be breaking out the Wagyu beef or shiraz.'
On Thursday, banking giant Commonwealth Bank also warned that households remained cautious.
'While we still anticipate a pick-up in household spending in 2025, a slower rate-cutting cycle could soften this recovery over the remainder of the year,' CBA senior economist Belinda Allen said.
Consumer spending lifted 0.3 per cent in June, the bank's closely watched household spending index revealed, for a third month of gains following rises of 0.4 per cent in both April and May.
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