**MNI 5 Things: Australia Q1 GDP Solid But H'Hold Details Weak

By Sophia Rodrigues

     SYDNEY (MNI) - The Australian Bureau of Statistics published the Q1 GDP

data Wednesday. Below are the five key observations we made:

     --GDP grew 1.0% q/q and 3.1% y/y, beating MNI median forecast for 0.85% q/q

and 2.8% y/y growth. There was upward revision to Q4 growth to +0.5% from +0.4%

originally reported. The outcome is likely to be in line with the Reserve Bank

of Australia forecast and supports their view that pick up in growth should see

some reduction in spare capacity in the economy.

     --While the headline number was better than expected, the details related

to households were weak. Household consumption rose 0.5% q/q, lower than

expected by economists and made just 0.2 point contribution to GDP. The last

time household consumption made such a low contribution to GDP was in Q1 last

year. Average earnings per worker (non-farm) rose 0.5% q/q, following a slight

upward revision to Q4 flat outcome (to +0.1%), but y/y slowed to 1.6% y/y from

+1.8% in Q4).

     --Households savings ratio fell to 2.1% in Q1 from 2.3% in Q2, the lowest

rate in several years, and points to continued spending by households out of

their savings, rather than income.

     --Nominal GDP in Q1 rose by a solid 2.2% q/q but y/y slowed to 3.9% from

3.5% in Q4 and 5.9% in Q3. Compensation per employee rose 1.2% q/q and average

compensation per employee rose 0.5% q/q after a flat Q4.

     --Net export made a 0.4 percentage point contribution to Q1 GDP, slightly

higher than 0.3 point indicated in the Balance of Payments data published on

Tuesday. 

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

[TOPICS: M$A$$$,M$L$$$,MT$$$$]