generally been taken as a sign of weak consumption overall. but the national accounts showed that household spending on services has been strong. households are spending more on entertainment, eating out and travel, particularly overseas travel. at one level, this was surprising given the clear signs of caution among households, but it is less surprising when account is taken of the on - going fast pace of increase in household income. for a time, this increased income was used to rebuild saving, but with the household saving ratio having stabilised in recent quarters, income growth is now providing the wherewithal to fund consumption. the national accounts also showed that australia ’ s gdp continues to be affected by the severe effects on mining activity of the floods over the australian summer. taken literally, the weakest sector of the australian economy over the past year has been the mining sector, where output has fallen by 9 per cent over the past year. we know this is in the process of being reversed, so we need to look through it to judge the underlying strength of the economy. our estimate of the underlying trend in mining - related activity over the next couple of years is for increases in the order of 10 to 15 per cent. the rest of the economy on the other hand, is growing at an annual rate of only about 2 per cent. this is below what would have been regarded as normal in the past. this slow pace of growth in the non - mining sector is not simply a matter of a shortfall in demand. there are signs that the capacity of this part of the economy to supply goods and services has also slowed. for one thing, growth in the working - age population has slowed markedly over the past couple of years, due largely to a slowdown in immigration. also, bis central bankers ’ speeches productivity growth continues to be low. for growth in the non - mining economy to pick up, it is likely that these trends will need to reverse. labour market data are available up to august. they continue to point to soft outcomes for employment, after the surprisingly fast increase last year. the unemployment rate has also risen by 0. 4 percentage points over the past few months, after having been steady at around 5 per cent for much of the year. these trends could be an indication of the economy having slowed recently to a pace that is below its potential. on the other hand, there are some aspects of labour market numbers that have a stronger feel. contrary to the slowing in the number of people employed, there has been

mario draghi : monetary policy in the euro area speech by mr mario draghi, president of the european central bank, at the ecb and its watchers xix conference, organised by the institute for monetary and financial stability, frankfurt am main, 14 march 2018. * * * over the past year, the ecb has progressively recalibrated its asset purchase programme. we have thereby tuned our monetary policy stance to the changing pitch of the recovery – what i have previously termed “ accompanying the recovery ”. 1 during this time, the economy has developed even more strongly than we expected and confidence in the euro area has increased. but it is not because real growth is strong that we can declare the job done. there is a very clear condition for us to bring net asset purchases to an end : we need to see a sustained adjustment in the path of inflation towards our aim, which is a headline inflation rate of below, but close to 2 % over the medium term. thereafter, our monetary policy will have to be calibrated so as to ensure that inflation continues along this path. while we are now more confident than in the past that inflation is on the right track, risks and uncertainties remain. for this reason, even once the outlook becomes less dependent on net asset purchases, monetary policy still needs to be patient, persistent and prudent to guarantee the return of inflation to our aim. developments in the real economy the economy has been growing consistently above current estimates of potential growth, by more than a percentage point last year. all euro area confidence indicators are close to their highest levels since the start of monetary union, even if the latest readings came in slightly below expectations. and there are signs of pent - up demand for both consumption and investment that still needs to be satisfied. for consumption, one useful indicator is the gap between essential purchases, such as food and rent, and non - essential ones, such as electrical goods and holidays. non - essential purchases – which make up around 50 % of household spending in the euro area – tend to be postponed during recessions and then to catch up as the business cycle advances. 2 such purchases are currently only 2 % above their pre - crisis level, compared with 9 % for essential ones. this implies that discretionary household spending still has scope to support the expansion. business investment is also gathering steam as uncertainty in the euro area recedes. it now stands 7 % above its pre - crisis level and surveys point to continued strong investment