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AUSTRALIA DATA: GDP Below Expectations, Household Spending Flat

AUSTRALIA DATA
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Australian Q3 GDP was weaker than market forecasts. The economy expanded +0.3%q/q against a 0.5% forecast. In y/y terms were were up 0.8%, against a 1.1% forecast and prior of 1.0%. This is the softest y/y print since end 2020 (when the Covid pandemic impacted). 

  • In terms of the detail, household spending was flat in the quarter, after a -0.3% dip in Q2. We slowed further in y/y terms to 0.4%.
  • General government spending was 1.4% in consumption terms, led by state governments. Broader government spending was also strong.
  • Dwelling and machinery and equipment investment rose in q/q terms, but again the government side was quite dominate. Private capital formation didn't make any contribution to GDP growth. Overall domestic demand rose 0.7% q/q, versus a 0.2% gain in Q2.
  • GDP per capita was down -0.3% continuing the negative trend.
  • Today's data doesn't paint a great picture for the domestic economy (outside of government expenditure). It is unlikely to shift near term RBA thinking though, with recent Oct data showing slightly firmer household spending trends. The central bank meets next Tuesday. 

Fig 1: Australia GDP & Household Spending (orange line) Y/Y

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Australian Q3 GDP was weaker than market forecasts. The economy expanded +0.3%q/q against a 0.5% forecast. In y/y terms were were up 0.8%, against a 1.1% forecast and prior of 1.0%. This is the softest y/y print since end 2020 (when the Covid pandemic impacted). 

  • In terms of the detail, household spending was flat in the quarter, after a -0.3% dip in Q2. We slowed further in y/y terms to 0.4%.
  • General government spending was 1.4% in consumption terms, led by state governments. Broader government spending was also strong.
  • Dwelling and machinery and equipment investment rose in q/q terms, but again the government side was quite dominate. Private capital formation didn't make any contribution to GDP growth. Overall domestic demand rose 0.7% q/q, versus a 0.2% gain in Q2.
  • GDP per capita was down -0.3% continuing the negative trend.
  • Today's data doesn't paint a great picture for the domestic economy (outside of government expenditure). It is unlikely to shift near term RBA thinking though, with recent Oct data showing slightly firmer household spending trends. The central bank meets next Tuesday. 

Fig 1: Australia GDP & Household Spending (orange line) Y/Y

Keep reading...Show less