Could we get another quarter of lower than expected economic growth?
The question follows lower than expected data yesterday.
The September quarter was a bit low with growth in the economy at 0.2%.
On Wednesday most economists expect growth will be around 0.7% to 1.0%, with the many forecasts around 0.9%.
Poorer than expected December quarter current account and business indicators data yesterday suggest the eventual figure could be on the low side.
But with the incomes side of the economy solid and recovering from the dip in September, some analysts say the impact of the weaker inventories and trade figures could be nullified.
The news won’t impact interest rate thinking at the Reserve Bank. The January building approvals and retail sales, to be released during today’s board meeting, will probably be more influential.
Company gross operating profits, in current prices, rose 2.2% in the December quarter, seasonally adjusted, and were down 11.2% in 2009, according to the Australian Bureau of Statistics. But that was after a surprise fall in September.
The current account was a deficit of $17.459 billion, higher than the median market expectation for a deficit of $17.2 billion in the quarter.
The ABS data showed that the deficit is expected to subtract from the GDP estimates.
It said that the increase of $7.750 billion in the deficit on goods and services in chain volume terms (adjusted for price changes) "would subtract 1.3 percentage points from growth in the December quarter measure of gross domestic product (GDP), according to the ABS.
That is better than the estimate for the September quarter for a negative impact of 1.8 percentage points
The business indicators data would make an 0.1 percentage point contribution to GDP. Inventories, a major part of this series of figures, will add an estimated 0.2 percentage points.
Inventories rose 0.2%, a bigger gain than the 0.1% recorded in the September quarter, but smaller than many (optimistic) estimates.
The estimate of income from sales by manufacturers in the December quarter, in seasonally adjusted chain volume measures, was up 3.5% and the estimated income from sales by wholesalers in the December quarter in adjusted chain volumes measures was up 4.1%.
They are both solid reports.
In other economic news, sales of new homes rose 9.5% in January, the best for five months, driven by a sharp rise in the booming Victorian market.
The 9.5% rise came after a 4.6% fall in December.
The rise was the most since August when they leapt 11%.
In Victoria, new home sales jumped 17.1%, in NSW, 3.1%, 6.3% in Queensland and 6.6% in South Australia.
And Australian manufacturing activity expanded at a two year high in February due to a lift in new orders which flowed through to stronger production and input deliveries.
The Australian Industry Group/PricewaterhouseCoopers performance of manufacturing index (PMI) rose by a seasonally adjusted 2.8 points in January to 53.8.
(Readings above 50.0 indicate a rise in activity.)
The result comes after an expansion in January and a fall in December.
Manufacturing growth was supported by a lift in new orders which flowed on to stronger production and input deliveries for the month.
The survey said selling prices rose for the first time in five months while input costs also increased.
And the TD Securities/Melbourne Institute’s latest inflation gauge shows price pressures moderate and under control.
The gauge rose 0.1% last month after the 0.8% rise in January.
In the 12 months to February the inflation gauge rose 1.9%, still below the Reserve Bank’s target range of 2% to 3% over the course of the economic cycle.
