The chances improved yesterday for modest positive growth in the September quarter national accounts, out later today.
Stronger than expected contribution from the current account and government spending looks like being enough to stop Australia from slipping into negative growth for the quarter.
Allied with a solid contribution from retail sales (up 0.7%) in the quarter, yesterday’s numbers will go a long way in offsetting the expected negative contributions from poor business investment and construction work, plus lower inventories and corporate profits.
These had led some economists to raise the possibility of an economic downturn in the September quarter.
According to the Australian Bureau of Statistics Australia reported a higher than expected current account deficit of $7.83 billion in the September quarter from a downwardly revised deficit of $5.413 billion in the June quarter.
The market forecast was for a deficit of $6.7 billion in the September quarter.
The ABS said the $2.417 billion rise in the deficit on goods and services would cut 0.4 percentage points from GDP growth in the September quarter.
But this was half most economists’ expectation for a cut of between 0.4 and 0.8 percentage points.
That left the current account deficit around 2.3% of GDP, which is very low by recent Australian standards and follows the boom in commodity prices this year, especially in iron ore and coal.
And the contribution from government spending will be a positive 0.2 percentage points, according to the ABS.
Government spending rose a much stronger 0.9% in the quarter, according to the ABS figures.
That was also much better than market expectations.
Most economists now put the growth, quarter on quarter, around 0.3% to 0.6%.
A reading of 0.5% would give a growth rate for the year to September of 3.4%, which would be on par with RBA thinking.
But we should keep in mind the possibility of revisions in the June quarter, and the fact that the GDP numbers always manage a surprise on the upside or downside.
