Tuesday, 26 February 2013

Aus Q4 GDP looking wobbly

Today's release of construction work done was bad news for Q4 GDP.  Private sector construction slipped 0.5%QoQ, which after astronomical growth in the last few years is not hugely surprising or concerning in itself.  The problem is that there is not much happening elsewhere.

Retail sales barely grew in Q4, although household consumption will get a bit of a lift from stronger car sales.  Data on equipment investment are released tomorrow, although its hard to believe they will be strong given how poor business sentiment was. 

Net exports will probably be decent, although this is partly down to a surge in December of iron ore and coal which at least in part was thanks to destocking (see this post).  Inventories appear likely to be a drag given they rose quite a bit in Q3, so even a slower increase would be a substantial negative.

Tomorrow's data on capex expectations will probably be much more important than this for policymakers and punters alike.  But don't forget to check what has happened in the recent past, for which I'd take the under on forecasts for Q4 GDP.










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