Figures out today will likely show Australia’s economy grew by between 0.7% and 1% in the 4th quarter of 2016, based on data released yesterday and Monday on corporate profits, stocks, trade, wages and salaries and government finances.
The most spectacular were the company profits on Monday – up more than 20% in the quarter, with mining up 44.6% in the three months alone.
That was the biggest rise 16 years and was matched yesterday by the size of the improvement in the current account deficit for the same three months.
The seasonally adjusted current account deficit fell 63% to $3.85 billion in the quarter, down from $10.2 billion in the September quarter and a fraction of the $21.1 billion in the final quarter of 2015.
The terms of trade on goods and services – the prices of exports relative to the prices of imports – rose 9.1% in three months to December 31, more than double the 4.5% rise in the September quarter.
Thanks to surging commodity prices which boosted Australia’s trade surplus in the December quarter, and cut the current account deficit to a 16 year low.
The surplus on the country’s goods and services trade rose by 49%, or $700 million, to $2.1 billion in the quarter, the Australian Bureau of Statistics (ABS) said.
That surplus (or net exports) will contribute 0.2 percentage point to the December quarter measure of gross domestic product, which is to be released by the ABS later today.
The September balance of payments lopped 0.2 percentage points from GDP in that quarter and payed a big part in producing the surprise 0.5% contraction.
Economists from various banks and other groups have pushed up their estimated of 4th quarter and full year GDP growth. The NAB was already at a quarterly growth rate of 0.9%, Westpac though lifted its estimate to around the same level. Both reckon the annual growth rate could be up to 2.1%, instead of 1.8% in earlier forecasts.
NAB reckons that based on the data releases already seen there could be a rise as high as 1.2% for the quarter, but adds that the way the ABS treats the various components of growth quite often produces outcomes a bit lower than simple arithmetic might suggest.
The market estimate has been pushed up to 0.8% from 0.7% and some economists say there could be a further boost by a revising down of the 0.5% contraction in the September quarter.
The trade data shows a significant upward revision in the September quarter’s contribution from 0.2 percentage point fall first reported, which could trim the contraction to 0.3%.
The Commonwealth Bank reckons GDP will come in around 0.7% for the quarter.
Yesterday’s government finance figures suggest a small positive contribution is possible – the figures were not much changed from the September quarter’s small positive addition.
