CommSec’s Tom Piotrowski explains why this might not be the time to celebrate RBA cutting interest rates.

The Australian economy has slowed to its weakest level since the tail end of the Global Financial Crisis as the Reserve Bank lunged to assist the struggling housing market by slashing rates to its lowest in history.

Employment numbers are flailing and a recent leading business survey from NAB declared the retail sector was “clearly in recession”.

But a new report from industry research firm IBISWorld said there will be a handful of sectors which could boom during a looming recession.

Senior analyst Tom Youl said households will see little benefit over the next 12 months as both wages and household consumption are expected to experience modest gains.

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He said the recently approved income tax cuts as well as lower interest rates will offer some relief to incomes but both financial policies are unlikely to provide meaningful economic growth.

“Under investment in productivity-boosting policy and packages, and chasing budget surplus when fiscal stimulus is needed, are anticipated to drag on the economy over the coming year,” Mr Youl said.

“In addition, signs of slowdown in the global economy, which has been reporting strong growth, pose a threat to export-oriented firms.”

Household consumption, which accounts for 55.8 per cent of the Australian economy, is the primary driver of GDP growth but that has fallen by nearly 3 per cent since 2015/16 as wage growth stagnated.

“Although Australian GDP has been growing, the corporate profit share of GDP has been rising strongly,” Mr Youl said.

“In other words, most of Australia’s economic growth over the past five years has been reported on corporate income statements rather than employee pay slips. This trend is expected to continue in 2019-20, limiting household consumption and economic growth.”

So, that’s what’s wrong with the economy. But which segments will benefit during a recession?

DEBT COLLECTION

Depressingly, IBISWorld senior analyst Jason Aravanis told news.com.au this industry will perform strongly when, well, there’s debt to collect.

“When the economy starts to slow down you’re likely to see more households defaulting on their debt and businesses hire more debt collectors,” he said.

“It’s certainly not a good sign.

“Australia might be particularly exposed to this trend because our household debt is very high compared to disposable income — it’s at a record high of about 190 per cent right now.

“The problem with having really high household debt is it becomes very difficult when you’ve got low wage growth like we do right now.”

TEMPORARY STAFF SERVICES

You might expect an uptick in unemployment during an economic slow down to bolster temporary staff services but Mr Aravanis said it will be driven by the inability for companies to commit to staff.

“When expectations of economic growth falter, businesses place a higher premium on having flexibility in their workforces,” he said.

“Meaning they can quickly either increase the number of staff or decrease the number of staff and not have ongoing commitments to pay wages and long term contracts.

“That’s why businesses typically ramp up their use of temporary staff because this gives them the ability to be more flexible when economic conditions can change quickly.”

ANTIQUE AND USED GOODS RETAILING

In 2013, when economic growth declined at the end of the mining boom, used goods business Cash Converters posted its highest ever revenue growth of any retailer with more than $100 million in sales.

“As consumer sentiment weakens, households divert spending to cheaper used items rather than purchasing more expensive new products,” Mr Youl said.

“In addition, as unemployment rises, consumers are more likely to sell off assets to cover their expenses, increasing the supply of goods for firms in the antique and used goods retailing industry.”

FURNITURE, APPLIANCE AND EQUIPMENT RENTAL

Similar to the last industry, general rental would benefit when wage growth is weak and household spending is limited.

“When consumer confidence falters, consumption expenditure is likely to go down and households are likely to want to retain their wealth by either renting goods or purchasing used goods,” Mr Aravanis told news.com.au.

UNIVERSITY AND OTHER HIGHER EDUCATION

When the GFC drove many countries into recession, younger residents and recent graduates struggled to get jobs.

This caused many to continue studying to increase job prospects.

“We didn’t see this in Australia because it technically never went into a recession,” Mr Aravanis said.

“Australia has had more than a quarter century of consistent growth, so if it were to enter a recession in the future we would expect something similar to happen with Australian universities.”

Continue the conversation on Twitter @James_P_Hall or james.hall1@news.com.au