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Felicity Emmett, senior economist at ANZ, are expecting Australia’s Q4 GDP to have risen a soft 0.2% q/q, following the 0.3% q/q rise in Q3, which would see annual growth decline to 2.4%.

Key Quotes

“GDP growth, at +0.2% q/q and +2.4% y/y, looks to be lower than the 2.8% annual growth the RBA forecast in its February Statement on Monetary Policy.”

“The main new pieces of information since our preliminary forecast last week are weaker wages, profits and inventories but stronger net exports and government finances. The surprises in these partial data have largely offset each other. Government spending looks to have risen a very strong 1.3% q/q and will contribute 0.4ppt to growth in the quarter.”

“In tomorrow’s report, the focus will be on the household indicators – consumption and income. Weak retail sales volumes (+0.1%) point to relatively modest growth in consumer spending. While retail spending accounts for only around 30% of consumption, ongoing weakness in car sales, falling house prices and tighter credit conditions will all weigh on consumer spending. We will be watching the GDP measure of average wages. Preliminary data suggest this is likely to continue to be lacklustre”