I posted earlier on the Australian Q4 GDP coming up today, what to expect.

Adding a few items of interest, all in one place.

ANZ on the GDP:

  • Expect up 0.5% q/q & up 2.6% y/y

ANZ note on the inputs:

  • Stronger-than-expected public spending & company profits
  • Weaker-than-expected inventories, wages and net exports
  • Broad-based weakness in the sales data released in Monday's business indicators release suggests that the production measure of GDP is likely to have been soft

More:

  • The risks to our GDP forecast are tilted slightly to the downside
  • The volatility in the quarterly data makes it more difficult to read the underlying momentum in the economy, but annual growth of 2.6% tells a story of ongoing sub-par growth

ANZ on implications for the RBA:

  • "If our forecast is correct, we do not see too many implications for monetary policy, given our estimate is broadly in line with the RBA's 2½% y/y forecast in February's Statement on Monetary Policy
  • That said, household spending growth in tomorrow's report will be particularly important given the RBA's ambitious expectation for growth to accelerate to above trend this year."

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NAB

  • Suggest GDP is likely to be 0.6% q/q and 2.7% y/y
  • While net exports and inventories present downside risks to the expenditure measure of GDP, a better than expected terms of trade outcome and solid employment growth in Q4 will provide some offset on the income measure

Westpac

  • Forecast 0.3% qtr, 2.5%yr (from 0.5% qtr)
  • Downside surprises from inventories and net exports
  • Domestic demand is weak in the quarter, edging only 0.1% higher
  • Mining investment downturn remains a key headwind
  • Total business investment expected to contract by 3.5% in Q4
  • The terms of trade fall of 3.2%qtr will contribute to an insipid read on nominal GDP, forecast to be 0.1%qtr, 1.8%yr
  • Forecast for consumption to expand by 0.5% in Q4, a moderation from a 0.7% gain in Q3
  • Positives are that the lower dollar is boosting the services sectors, as evident from strong export growth, and lower rates are boosting home building activity
  • Also, job creation strengthened in 2015, including a 0.7%qtr increase in Q4.

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Also, comments from Goldman Sachs late yesterday on the RBA decision and what to look for ahead from them

GS noted that the change of one word, from:

  • February's "Continued low inflation may provide scope for easier policy"

To

  • Yesterday's "Continued low inflation would provide scope for easier policy"

is important, its makes a cut more likely. "Would" trumps "may".

GS say to watch the next CPI release from Australia (due in April) - that could be the catalyst for a cut in May.

  • Cite the risks to global growth, the resilient AUD, domestic economic considerations
  • Say the statement from RBA governor Glenn Stevens yesterday signaled an incrementally dovish shift
  • GS expects a 25pb cut in May and again in July (but hedge the July call saying its subject to election timing)