MNI 5 Things: Dnside Risk to Australia Q4 GDP Fcast +0.5% Q/Q

By Sophia Rodrigues

     SYDNEY (MNI) - The Australian Bureau of Statistics will release the Q4 GDP

data at 1130 hours local time. Below are the five things we would look for:

     --MNI median forecast is for GDP to grow 0.5% q/q and 2.5% y/y. However,

the risk is to the downside. Note three of the four big banks revised their GDP

forecast downwards on Tuesday and are expecting 0.4% q/q growth.

     --Household consumption is the only key unknown in the GDP calculations.

According to Macquarie economist Justin Fabo, it has to surprise significantly

to his 0.7% estimate for GDP to surprise to the upside.

     --Household saving ratio will be the one to watch closely given expectation

of a rise in household consumption. We would like to know if higher consumption

came out of income or savings but are alert to the possibility that savings

ratio is volatile and subject to big revisions. In Q3, the household savings

rate rose to 3.2% from a revised 3.0% in Q2 as household income rose 0.5% and

outpaced the 0.2% rise in the current price index for household final

consumption expenditures.

     --Average earnings per hour will be an important number and expectation is

for a subdued outcome for the third quarter in a row. In Q3, seasonally adjusted

compensation of employees increased 1.2%, average compensation per employee

increased 0.3%.

     --Any past revisions in GDP could lead to y/y being lower or higher than

expected.

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

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