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MNI ANALYSIS: Australia GDP: Consumption Up But Avg Wage Flat

By Sophia Rodrigues
     SYDNEY (MNI) - Australia's fourth quarter GDP growth slowed
quarter-on-quarter as a fall in net export offset the strong rise in household
consumption while a wage measure important to the Reserve Bank of Australia's
forecast may have disappointed.
     Data published by the Australian Bureau of Statistics Wednesday showed GDP
grew 0.4% q/q compared with an upwardly revised 0.7% (from +0.6%) growth in Q3.
In y/y terms, GDP rose 2.4%. The outcome was lower than MNI median forecast for
+0.5% q/q and +2.5% y/y and was also lower than the RBA's estimate.
     The main contributor to growth was a 1.0% rise in household consumption
which added 0.6 point to Q4 GDP. The key detractor was net exports as exports
fell 1.8% q/q and imports rose 0.5%. Together they took off 0.5 point from Q4
     Dwelling investment fell 1.3% q/q and made no contribution to Q4 GDP. In Q3
it detracted 0.1 point.
     Private capital formation detracted 0.4 point in Q4 but this was partially
offset by public investment which added 0.2 point.
     The rise in household consumption coupled with upward revision in Q3
consumption would comfort the RBA but offsetting this is continued decline in
household savings ratio even though the latest quarter saw a tiny rise.
Household savings ratio was at 2.7% in Q4 versus 2.5% in Q3.
     Similarly, a continued increase in compensation of employees is a positive
for the economy but offsetting is flat compensation per employee which has a
closer relation with inflation. The flat q/q outcome is a result of strong
growth in employment during the quarter but it does raise a question on whether
wage growth has indeed troughed as the RBA suggested in the cash rate statement
--MNI Sydney Bureau; tel: +61 2-9716-5467; email:
[TOPICS: MALDS$,M$A$$$,M$L$$$,MT$$$$]

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