I am waiting to get more responses to the Australian GDP data, but here is a round up of some of the initial comments, most via Twitter

The data:

Australia - Q1 GDP

0.9 % q/q

  • expected +0.7% q/q
  • prior was +0.5%

2.3 % y/y

  • expected +2.1% y/y
  • prior was +2.5%
  • .... Still well short of what's needed to cut unemployment
  • Good lift in productivity
  • Sharp falls in real unit labour costs
  • Industries driving GDP in Q1 "were Mining +0.3ppts and Financial and insurance services +0.2ppts
  • Terms of trade -2.9%

Q1 GDP driven by

  • consumption
  • housing
  • stocks
  • & net exports
  • with -ve capex. > exp but still only 2.3%yoy & GNE just 0.4%qoq, 1.5%yoy
  • Strong Aus growth is welcome and suggests near term risk of slump is low. But does not tell us whether 2016 will be 3% or 1%
  • Q1 private consumption deflator just +1.2%yoy (=benign inflation)
  • Terms of trade -11.4%yoy on falling export prices, GDP deflator -1.1%yoy
  • RBA will be relieved with GDP but remain on alert for weakness in 2016 because it is expectations for growth that matter for rates
  • Real GDP +2.3%yoy, but nominal GDP just +1.2%yoy due to hit from falling commodity prices. Thats what matter for Federal tax revenue
  • Aus productivity growth has stalled (GDP/hr worked just 0.2%yoy) =>slower jobs growth. Highlights need for more reform
  • Household savings rate still relatively high at 8.3% => highlights more conservative approach to net + nice buffer for consumer spending
  • The national accounts are a relief, rather than "very good" (Citing the 'Real net national disposable income' - which was +0.1% in the quarter and flat for the past year)
  • Don't over read the GDP - Income brutally weak and consumption soft despite drop in saving rate. The economy is steady but sub par