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Q3 Consumption Robust, Too Early To See Impact Of RBA Hikes


Q3 GDP rose 0.6% q/q to be up 5.9% y/y, close to expectations. Growth was driven once again by household consumption with a 0.6pp quarterly contribution. While this data is historical, it does give an idea of where we were at coming into the final quarter, and it shows that consumption growth began normalising but is still above pre-Covid rates and that investment remained soft. The end of Q3 was only 4 months after the first RBA hike and given the lags, too early to assess the impact on activity.

  • It was a high 0.6% print at 0.647% and so not much more would have brought it to the Bloomberg consensus’ 0.7% q/q.
  • Real household consumption rose 1.1% q/q down from Q2’s 2.1% but still well above the 0.3% average of the 2 years before Covid. Spending was supported by a very strong rise in employee compensation up 3.2% q/q, the highest since 2006, to be +10% y/y, and a further drawdown on savings. The savings rate recorded its fourth consecutive fall as it normalises and is now 6.9% from 8.3%, despite the pickup in compensation.
  • Private investment was lacklustre for the fourth consecutive quarter and down 0.3% y/y. But there was a rebound in dwelling and non-dwelling construction, as supply and labour constraints eased. Of note was the 4.7% q/q contraction in the private non-financial gross operating surplus reflecting higher costs and lower commodity prices.
  • Net exports detracted 0.2pp from growth but exports were still strong rising 2.7% q/q driven by both goods and services. Import volumes were even stronger though rising 3.9% q/q to be up 19.1% y/y driven by travel services (now 56% of pre-pandemic level), fuel and vehicles.
Australia GDP growth %

Source: MNI - Market News/ABS

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