Today’s national accounts for the three months to December are not expected to be brilliant.
In fact, at best they could be between 0.2 percentage points to 0.4 – while some pessimists believe the reading could be a negative 0.1 because of the weakness in household income.
Household income and spending data in the quarter national accounts will be more of a concern to the Reserve Bank than the headline GDP figure.
The AMP’s chief economist, Dr. Shane Oliver says “December quarter GDP growth to be released tomorrow looks like being soft again albeit with public spending saving the day but possibly not enough to prevent a “per capita” recession, ie, two quarters in a row with GDP per person going backwards.”
Yesterday’s current account data for the December quarter will not help GDP growth. In fact the Australian Bureau of Statistics said it could detract 0.2 percentage points from GDP in today’s accounts (that’s not accounting for any impact of revisions to September data, which is possible).
Government finance and capital formation data won’t add anything to GDP, but a 1.6% rise in government consumption could offset that and help GDP to do a bit better than expected.
Westpac economist Andrew Hanlan said higher commodity prices have boosted mining profits, which has led to higher tax revenue and thus more government spending.
J.P. Morgan economist Tom Kennedy said the results that didn’t change the bank’s prediction of fourth-quarter GDP growth of 0.4%.
BIS Oxford Economics chief Australia economist Sarah Hunter said she now expects December quarter GDP growth “significantly below” 0.5%, pulling full-year 2018 growth below 3%.
Yesterday’s December quarter current account deficit fell 33% to $7.2 billion thanks to higher commodity prices for iron ore, LNG, alumina, and coal, easing from the September quarter’s $10.78 billion.
In seasonally adjusted chain volume terms, the balance on goods and services was a surplus of $1.24 billion, down on the September quarter surplus of $2.02 billion.
Meanwhile, car sales in February fell to a multi-year low.
The Federal Chamber of Automotive Industries said yesterday that 87,102 new vehicles were sold across the country last month, down 9.3% on the same month in 2018. Through the first two months of 2019, 169,096 new vehicles were sold, an 8.4 percent drop on the start of 2018.
The last time so few vehicles were bought in February was in 2012.
