5 Mar 2015
Australia: GDP consistent with sub-trend growth outlook - RBS
FXStreet (Bali) - The GDP report in Australia is consistent with the message of sustained sub-trend growth, notes Greg Gibbs, FX Strategist at RBS.
Key Quotes
"The GDP report in Australia is consistent with the message of sustained sub-trend growth. The outcome was on expectations, falling from 2.7%y/y in Q3 to 2.5%y/y in Q4."
"The data showed an improving trend in consumption rising from 2.2%y/y in Q3 to 2.6%y/y in Q4. Household consumption was even a bit better improving from 2.4%y/y to 2.8%y/y. This compares with trend GDP growth near 3% or just above, and thus does not reveal an economy too far below par."
"The big detractor from growth is business investment driven by the mining down-turn. Private business investment has been in trend decline for almost two years, down 3.2%y/y. However, dwelling investment is now growing strongly, up 8.1%y/y, contributing 0.4%y/y to GDP growth a high since 2003. Private Gross Capital Formation (covering both business and dwelling investment) contributed -0.1%y/y to GDP growth."
"Helping offset the down-turn in mining investment is the transition to stronger export volume growth. Over the year net exports have added 2.0% to GDP growth. But the value of these exports are up far less as the terms of trade decline (lower commodity prices). A measure of the real income growth adjusted for the weaker terms of trade (real Gross Domestic Income rose 0.1%y/y)."
"Income growth looked less impressive. Compensation on employees rose only 0.2%q/q, up 2.3%y/y, reflecting a fall of 0.5% in average earnings per employee. Gross operating surplus (company earnings) rose a strong 1.1%q/q, lifted by banks, but was up only 0.6%y/y. The income measure of GDP (1.7%y/y) was weaker that the more closely followed expenditure measure."
Key Quotes
"The GDP report in Australia is consistent with the message of sustained sub-trend growth. The outcome was on expectations, falling from 2.7%y/y in Q3 to 2.5%y/y in Q4."
"The data showed an improving trend in consumption rising from 2.2%y/y in Q3 to 2.6%y/y in Q4. Household consumption was even a bit better improving from 2.4%y/y to 2.8%y/y. This compares with trend GDP growth near 3% or just above, and thus does not reveal an economy too far below par."
"The big detractor from growth is business investment driven by the mining down-turn. Private business investment has been in trend decline for almost two years, down 3.2%y/y. However, dwelling investment is now growing strongly, up 8.1%y/y, contributing 0.4%y/y to GDP growth a high since 2003. Private Gross Capital Formation (covering both business and dwelling investment) contributed -0.1%y/y to GDP growth."
"Helping offset the down-turn in mining investment is the transition to stronger export volume growth. Over the year net exports have added 2.0% to GDP growth. But the value of these exports are up far less as the terms of trade decline (lower commodity prices). A measure of the real income growth adjusted for the weaker terms of trade (real Gross Domestic Income rose 0.1%y/y)."
"Income growth looked less impressive. Compensation on employees rose only 0.2%q/q, up 2.3%y/y, reflecting a fall of 0.5% in average earnings per employee. Gross operating surplus (company earnings) rose a strong 1.1%q/q, lifted by banks, but was up only 0.6%y/y. The income measure of GDP (1.7%y/y) was weaker that the more closely followed expenditure measure."