Australian third quarter GDP was reported at +0.3% q/q much lower than the expected +0.6% and the previous quarter’s +0.9%, On a yearly basis the growth rate is 2.8 % lower than the expected +3.3% and prior +3.4%. The Australian dollar sold off sharply on the news.
Australian third quarter GDP was reported at +0.3% q/q much lower than the expected +0.6% and the previous quarter’s +0.9%, On a yearly basis the growth rate is 2.8 % lower than the expected +3.3% and prior +3.4%. The Australian dollar sold off sharply on the news.
Image via @teconomics
Highlights
- Consumption +0.3% q/q
- Price index 0.9% q/q
- Negative inventories contribution
- Savings rate at its lowest since Q4 2017
Clearly the economy has lost momentum, no surprise with the constant political partisanship hurting both business and consumer enthusiasm coupled with a weakening housing market particuarly in the two largest cities, Sydney and Melbourne.
The housing weakness is excasserated for the consumer against a backdrop of a further tightening of lending standards to the housing sector. Politicians and an angry herd always forget, be careful what you wish for.
Business investment turned lower led by mining, with the completion of major gas projects. Through all this however jobs growth remained robust, which is a positive sign. The effects of drought and supply disruptions in the mining sector overhang.
The housing situation is shown in household incomes with the gain in spending affectively ‘funded’ by a reduction in savings which is now at a post GFC low. Again this is was the inevitable situation after the attack on banks in Australia. There was perhaps a better way to clear this up then attack the consumer and bank holders in the end.
Public demand and net exports are key growth engines and are the core to a regain in the growth rate. The key for Australains to grasp across all demographics is that the wealth effect is no longer supporting consumption and from that much of the growth and expectations that politicians push towards their bases.
With the RBA off for two months there is a big lag for a response there and a long time for talking heads to stir the pot.
Source: abs
From a sunburnt country