Australia: Q4 GDP likely to print 0.5% figure - Nomura

Andrew Ticehurst, Research Analyst at Nomura, suggests that with the release of partial data for Australian economy this week covering inventories, profits, net exports and government spending, their forecast for tomorrow’s Q4 GDP print is unchanged, at 0.5% q-o-q, 2.5% y-o-y.

Key Quotes

“A few weeks ago, consensus was calling 0.7% q-o-q, but shifted lower recently. Today’s releases on net exports and government spending were a fraction better than we expected and look to have taken out some of the downside risk we previously flagged.”

“We expect the national accounts to show growth driven by private consumption (0.65% q-o-q), plant and equipment investment (2% q-o-q), a slight run-up in inventories (0.1pp) and another big rise in government spending (1.9% q-o-q), with offsets coming from dwelling construction (-2% q-o-q) and net exports (-0.5pp). We again emphasise that some of the softness in Q4 GDP comes from temporary disruptions to coal exports. We expect coal exports to rebound in Q1 and forecast a stronger 0.8% q-o-q rise in Q1 GDP.”

“We also expect strength in the retail and construction sectors; a modest (0.1% q-o-q) rise in the terms of trade; fairly soft readings for wage growth – with the wages bill up by 1% q-o-q but employment growth rising ~0.75% q-o-q, the national accounts measure of wages per employee look to have risen by ~0.25% q-o-q; and soft readings on productivity (with GDP rising ~0.5% q-o-q but employment growth rising ~0.75% q-o-q).”