A huge miss for the Q3 Australian GDP - data here

Also:

More responses now (bolding mine):

Capital Economics

  • Although the Australian economy contracted by 0.5% in the third quarter, this is very unlikely to be the start of a recession as GDP will most probably rebound in the fourth quarter
  • Nonetheless, this is only the fourth fall in GDP in 25 years, which highlights that the economic backdrop is not consistent with a big rise in underlying inflation
  • This supports our view that interest rates may fall from 1.5% to 1.0% next year, which could drag the Australian dollar below US$0.70

CBA:

Annual growth stepped down sharply... is now more consistent with the softening in labour market outcomes since the start of 2016

The main question for analysts is whether the QIII result is just a pothole along the way

Or the start of something more sinister

We favour the "pothole" analogy

  • ... in a sense it should be easier for the economy to grow from here. The income drag from falling commodity prices has ended in spectacular fashion with the surge in key bulk commodity prices
  • The spending drag from falling mining capex will soon be complete
  • What lies ahead are the benefits of rising mining production and resource exports

There are some parts of the QIII pothole that may prove more persistent.

  • The decline in dwelling investment is consistent with the idea that the peak in the residential construction boom is at hand
  • The downward revisions to the household saving rate is concerning
  • The gap between reasonable consumer spending growth and weak income growth has been filled by cutting the savings rate
  • This outcome may be harder to sustain going ahead given the lower savings buffer

HSBC:

  • Q3 GDP print was very weak
  • A significant downside surprise
  • downside surprise was mostly driven by a sharper-than-expected fall in investment, which more than offset a modest rise in household consumption and inventories
  • Net exports were a drag in the quarter, as coal production was also temporarily disrupted
  • However, the Q3 results pre-date much of the ramp up in bulk commodity export prices and there is a significant ramp up in export volumes yet to come from capacity that has already been built
  • The strong rise in bulk commodity prices is set to support a boost to incomes in Q4
  • Timely indicators of business sentiment, retail sales and job advertisements suggest a lift in growth in Q4
  • In short, we think this will be a one-off decline, with growth returning in Q4

CommSec

  • This will turn out to be just a blip on the radar screen, but a very important blip
  • Many Australians have become complacent ... includes businesses and politicians
  • The Reserve Bank has been intimating for some time, monetary policy is reaching its limits. Infrastructure spending may prove useful in coming quarters in providing fresh momentum to the economy

Bloomberg Intelligence:

  • RBA has signalled it expected the economy to slow and expects a pick up ahead
  • Likely related to the bounce in metals prices in Q4
  • Suggest the RBA inclined to look through this poor Q3 result
  • But weak consumption is a concern
  • RBA watching the labour market, if it breaks down further in the first quarter of 2017 the RBA may ease further

TD Securities

  • We're still confident that this is just a perfect storm of negatives
  • We shouldn't be talking about technical recessions
  • We should be talking about what rebound we can expect for Q4
  • It just seemed like an unexpected confluence of negatives that all happened to be concentrated in one quarter