Australian Q4 GDP likely to have risen 0.4 pct q/q, weaker than RBA’s forecasts in latest SoMP: ANZ Research

Australia’s fourth-quarter gross domestic product (GDP) is expected to have risen just 0.4 percent q/q. This follows a rise of 0.6 percent q/q in Q3 and would see annual growth drop down to 2.4 percent, according to a recent report from ANZ Research.  

At 0.4 percent q/q and 2.4 percent y/y, GDP growth looks to be a little weaker than the RBA forecasts in the most recent Statement on Monetary Policy.

The main new pieces of information since ANZ’s preliminary forecast last week are significantly weaker profits, wages and inventories and slightly stronger government spending and net exports. The biggest miss for us was on the wages numbers: the wages data in the Business Indicators release on Monday and in Tuesday’s Government Finance data were all weaker than we had anticipated.

This suggests that the wage rate in Wednesday’s GDP report is likely to show only a very modest improvement in terms of quarterly growth. This, alongside the weakness in January retail sales, makes us a little more concerned about the outlook for household incomes and consumption.

"On that front, we see the household consumption and wages numbers in the GDP report as being of key importance. Retail sales volumes point to a sizeable bounce in consumption after the very weak 0.1 percent rise in Q3. On wages, we will be watching closely the GDP measure of average wages. Preliminary data suggest that this is likely to remain soft, although base effects suggest that the annual growth rate will tick up," the report added.

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