A big week for the Australian economy – the country’s GDP is expected to have regained the above trend 3% level (as forecast several months ago) when the September quarter National Accounts are released on Wednesday, a day after when the Reserve Bank board will complete a year of doing nothing about its official cash rate.
September quarter GDP growth to show a rise of 0.7% quarter on quarter which will take annual growth to 3% as the 0.4% GDP contraction of the September quarter last year drops out.
The 0.7% figure will be almost the same as the 0.8% rate in the June quarter.
The Australian Bureau of Statistics lifted the annual GDP rate for the year to June to 2% (from 1.9% initially reported) in a small revision in October.
While consumer spending and housing investment are likely to be soft this should be more than offset by strengthening business investment, construction spending (which was much stronger than expected) net exports and public spending, according to the AMP’s chief economist, Dr Shane Oliver.
Data releases from the Bureau of Statistics late today and then tomorrow on wages, salaries, business inventories, government spending and the current account will fill in the remaining gaps in the National Accounts.
The big imponderables will be the impact of any change in business inventories (a rise will add to growth) and the size of the current account deficit.
Tomorrow brings the final board meeting of the RBA and no move on rates
The AMP’s chief economist, Dr Shane Oliver says “For the RBA we expect more of the same – on hold.
“While strong business conditions, solid jobs growth, improving global growth and the RBA’s own forecasts for a pick-up in growth argue for an eventual rate hike, ongoing low inflation, record low wages growth, uncertainty around consumer spending, signs that the housing cycle is slowing and the still strong $A argue against a rate hike.
“We remain of the view that the RBA will leave the cash rate on hold until a probable rate hike late next year at the earliest."
Other figures out this week include October retail sales tomorrow and the October trade surplus on Thursday and housing finance on Friday. Along with Thursday’s surprise rise in building approvals, the figures will tell us what shape the economy is in as it started the final quarter of the year.
The retail sales data will be looked at very closely to see if there is any sign of a pick up after the flat growth in September and the quarter (which was a big shock).
Any rise is likely to be small, perhaps 0.1%, but analysts warn that there could be revisions in the September quarter figures.
