NAB write "Annual growth is now at........>

AUSTRALIA: NAB write "Annual growth is now at 2.3%, at the low end of most

estimates of trend. Importantly, households reported another quarter of weak

spending growth; consumption rose only 0.4% in the quarter. Combined with soft

private investment figures, private demand contributed 0 ppt to GDP, compared to

an average of 0.4ppt for the previous four quarters. For the RBA, the data makes

its forecast of 3% growth over 2019 look increasingly unlikely, as growth would

need to accelerate markedly from its current rate of 2.3% y/y. Further, another

quarter of weak consumption growth means that three of the last four quarters

have now seen household spending grow at or below 0.4% q/q. We believe the Bank

will be increasingly uncomfortable with the "growing tension between strong

labour market data and softer GDP data" as the weakness in household spending

appears to be more persistent than it forecast. Should the progress in the

labour market falter over the next few months, the Bank will likely be forced to

cut rates to support households. That said, NAB's forecast is for no change to

the cash rate in the foreseeable future, although we do see significant risk of

a cut, a risk which has risen with these weak data."