The Australian economy performed solidly over the past year, against the backdrop of strengthening global growth, which lifted in 2017 to its fastest pace since 2011, notes the research team at Westpac.
Key Quotes
“In the March quarter, real GDP grew by 1.0% lifting annual growth to 3.1%, an above trend pace, with trend judged to currently be around 2.7%. While non-farm GDP annual growth is a more impressive 3.6%.”
“For real GDP, this is the fastest annual pace since 2012, at the height of the mining investment boom (with the exception of a one-off in June 2016, of 3.3%).”
“The arithmetic for the March quarter GDP is: domestic demand 0.6%qtr; inventories 0.2ppts; net exports +0.35ppts; and statistical discrepancy -0.14ppts (i.e. the expenditure measure exceeded the average of the income and production estimates).”
“Exports were the key swing factor between Q4 and Q1, with a dip late last year quickly reversed as the uptrend resumed. Net exports subtracted a hefty 0.65ppts from Q4 GDP, which printed at 0.5%qtr, 2.4%yr; but added 0.35ppts to activity in Q1.”
“Real GDP up by 3.1% over the past year brings output growth more in to line with job creation, which was a brisk and unsustainable 3.5% over the period. The hiring burst of 2017 was in part a catch-up after an undershoot in 2016 associated with uncertainty around the Federal election.”
“In summary, the Q1 national accounts highlight some key positives which will continue to support activity in 2018, notably public demand, exports, as well as business investment. However, the recent loss of momentum in jobs growth adds to the uncertainty around the consumer and the housing sector is a headwind as lending conditions tighten.”
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