Weak earnings and wages growth in the key construction, retail and hospitality industries show economic growth remains sluggish, as the Albanese government was forced to defend saying higher interest rates set by the central bank were “smashing” the economy.

The government’s management of the economy has become a key political debating point ahead of the release of critical GDP figures on Wednesday that will give a clearer picture of how the economy is responding to the Reserve Bank of Australia’s decision to keep interest rates on hold since November 2023.