**MNI 5 Things: Revisions Boost Australia Q2 Y/Y GDP

--Household Consumption Up But Saving Ratio Falls

By Sophia Rodrigues

     SYDNEY (MNI) - The Australian Bureau of Statistics published the Q2 GDP

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

     --GDP grew 0.9% q/q beating MNI median forecast for 0.7% rise.

Significantly, there were upward revisions to previous quarters which resulted

in y/y growth accelerating to +3.4%, compared with MNI median forecast for just

2.8% rise. Q1 GDP was revised up to 1.1% from 1.0%, Q4 2017 GDP was revised up

to +0.7% from +0.5%. The overall outcome appears even higher than Reserve Bank

of Australia's forecast that first half GDP grew at an above-trend pace, and

supports its guidance for the next move in the cash rate to be up, not down.

     --Household consumption rose 0.7% q/q, accelerating from a revised 0.5%

rise (from 0.3%) in Q1. The rise reflects strong retail spending across a number

of components including food, recreation and culture, and furnishings and

household equipment. However, slowing income has meant the consumption has been

supported by savings. The household savings ratio fell to 1.0% in Q2 from a

downwardly revised 1.6% in Q2, and was the lowest since the December 2007. 

     --Growth in compensation of employees slowed in Q2, rising 0.7% q/q versus

1.2% rise in Q1. Average compensation per employee rose just 0.1%, slowing

sharply from 0.5% in Q1, and indicated growth in employees is outgrowing wage

rates.

     --Nominal GDP slowed in Q2, rising 1.0% q/q compared with 2.2% rise in Q1.

In y/y terms, however, nominal GDP grew 5.5% versus 3.9% in Q1. Private

non-financial corporations were the main contributors to growth in gross

operating surplus which was up 0.8% q/q. On a y/y basis, gross operating surplus

rose 7.2% due mainly to contribution from the mining sector.

     --Gross fixed capital formation was flat in Q2, with both private and

public investment flat. Private dwelling construction contributed 0.1 percentage

point to Q2 GP, a slowing from 0.2 point contribution in Q1. Inventories made no

contribution to GDP, and net export added 0.1 point. Household consumption

contributed 0.4 point and government contributed 0.2 point.

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

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