Australia’s Economy Gathers Momentum as Fresh Storms Brew

Australia’s economy grew at a faster pace in the fourth quarter of 2024, shrugging off the threat of a recession just as the global outlook has dimmed amid a rapidly escalating trade war led by the U.S., and a sharp rise in geopolitical risks.

The economy grew 0.6% sequentially in the December quarter, and by 1.3% from a year earlier, the Australian Bureau of Statistics said Wednesday. The economy had clocked an annual growth rate of 0.8% in the prior quarter.

While the economic growth remains well below its historical average pace, it is pulling clear of a slump that saw growth virtually flat-line over the last year. Meanwhile, fresh storms are brewing as the U.S. moves to drive up tariffs on its key trading partners and stoke global uncertainty by halting aid for Ukraine in its war against Russia.

The Reserve Bank of Australia has said it is watching the situation closely, especially in terms of how it affects China, the country’s largest trading partner. However, the RBA’s trajectory for interest rates remains unclear as the central bank is uncertain about how crippled global supply chains and rapidly rising tariffs will affect inflation.

Coupled with the probability of weakened global growth, the central bank remains cautious.

RBA Deputy Gov. Andrew Hauser told a conference earlier Wednesday that even as the global backdrop weakens, the policy-making board of the RBA doesn’t yet see a need for a series of interest rate cuts, adding to the one announced in February.

“Interest rates will go where they need to go to maximize the chances of keeping inflation sustainably in the target band while helping to sustain full employment. Progress towards that target has been good — but it is too soon to declare victory,” Hauser told the AFR Business Summit.

Both public and private spending contributed to the modest recovery in growth in the fourth quarter, supported by a rise in exports of goods and services, the ABS said.

GDP per capita grew 0.1% this quarter following seven consecutive quarters of falls, it added.

Household spending rose 0.4% after a flat result in the September quarter with spending on essentials such as rent and health among the highest contributors to spending growth, the data showed.

Household discretionary spending rose as people made the most of retail sales events and increased spending on hospitality, the ABS said.

Growth in government spending moderated to 0.7% per cent in the quarter following larger rises in previous quarters, the data showed.

Private investment rose 0.3% in the quarter with a focus of new engineering, construction of electricity generation and distribution projects, and mining.

Public investment rose 1.8% amid a boom in state and territory government spending on public transport, roads, water and renewable electricity infrastructure, the ABS said.

Write to James Glynn at james.glynn@wsj.com

The boom in casual footware ushered in by the pandemic has ended, a potential problem for companies such as Adidas that benefited from the shift to less formal clothing, Bank of America says.

The casual footwear business has been on the ropes since mid-2023 as people began returning to office.

Analyst Thierry Cota wrote that while most downcycles have lasted one to two years over the past two decades or so, the current one is different.

It “shows no sign of abating” and there is “no turning point in sight,” he said.

Adidas and Nike alone account for almost 60% of revenue in the casual footwear industry, Cota estimated, so the sector’s slower growth could be especially painful for them as opposed to brands that have a stronger performance-shoe segment. Adidas may just have it worse than Nike.

Cota downgraded Adidas stock to Underperform from Buy on Tuesday and slashed his target for the stock price to €160 (about $187) from €213. He doesn’t have a rating for Nike stock.

Shares of Adidas listed on the German stock exchange fell 4.5% Tuesday to €162.25. Nike stock was down 1.2%.

Adidas didn’t immediately respond to a request for comment.

Cota sees trouble for Adidas both in the short and long term.

Adidas’ lifestyle segment, which includes the Gazelles and Sambas brands, has been one of the company’s fastest-growing business, but there are signs growth is waning.

Lifestyle sales increased at a 10% annual pace in Adidas’ third quarter, down from 13% in the second quarter.

The analyst now predicts Adidas’ organic sales will grow by a 5% annual rate starting in 2027, down from his prior forecast of 7.5%.

The slower revenue growth will likewise weigh on profitability, Cota said, predicting that margins on earnings before interest and taxes will decline back toward the company’s long-term average after several quarters of outperforming. That could result in a cut to earnings per share.

Adidas stock had a rough 2025. Shares shed 33% in the past 12 months, weighed down by investor concerns over how tariffs, slowing demand, and increased competition would affect revenue growth.

Nike stock fell 9% throughout the period, reflecting both the company’s struggles with demand and optimism over a turnaround plan CEO Elliott Hill rolled out in late 2024.

Investors’ confidence has faded following Nike’s December earnings report, which suggested that a sustained recovery is still several quarters away. Just how many remains anyone’s guess.

But if Adidas’ challenges continue, as Cota believes they will, it could open up some space for Nike to claw back any market share it lost to its rival.

Investors should keep in mind, however, that the field has grown increasingly crowded in the past five years. Upstarts such as On Holding and Hoka also present a formidable challenge to the sector’s legacy brands.

Shares of On and Deckers Outdoor , Hoka’s parent company, fell 11% and 48%, respectively, in 2025, but analysts are upbeat about both companies’ fundamentals as the new year begins.

The battle of the sneakers is just getting started.

Australia’s Economy Gathers Momentum as Fresh Storms Brew

The pandemic-fuelled love affair with casual footwear is fading, with Bank of America warning the downturn shows no sign of easing.