Australia will receive its latest economic report card today with the release of Q4 GDP.
Following the release of various partial GDP inputs over the past month, it looks like economic growth was probably OK, rather than spectacular, in the final three months of 2017.
However, while we now know how much of the economy performed, we still don’t know how household consumption — the largest part of the Australian economy — fared during the quarter.
That means that this report, like the others, carries the potential to surprise in either direction.
Here’s the state of play.
- In the September quarter, GDP grew by 0.6% in seasonally adjusted chain volume terms, slightly below the 0.7% level expected by economists.
- GDP growth in the June quarter — originally reported as an increase of 0.8% — was revised higher to show an increase of 0.9%, the strongest since the first quarter of 2016.
- Despite the small downside miss for quarterly GDP growth, the year-on-year rate increased to 2.8% from an upwardly revised 1.9% level in Q2, the fastest increase since the June quarter last year.
- Real GDP in per capita terms grew by 0.3% in seasonally adjusted chain volume terms, half the level reported for headline GDP. From a year earlier, it grew by a smaller 1.3%.
- Nominal GDP — measuring changes in both volumes and prices — rose by 0.6%, leaving it up 5.9% from a year earlier.
- Today, economists expect a slight deceleration in economic growth during the December quarter.
- The median economist forecast looks for an increase in real GDP of 0.5%, an outcome that will see the year-on-year rate fall back to 2.5% without revisions to prior data.
- That would be in line with forecasts offered by the RBA in February.
- Household consumption, along with public consumption and investment, are expected to contribute to growth during the quarter, helping to offset likely declines from residential construction, business investment and net exports.
- Adding uncertainty to the quarterly figure, household services consumption — the largest individual part of the Australian economy — won’t be known until the GDP report is released.
- We already know that retail sales volumes rose by a strong 0.9% during the quarter — the question is whether that extended to spending on services.
- Given the importance of household consumption in helping to power economic growth both now and in the future, there’ll likely be plenty of interest on movements in the household savings ratio and average compensation of employees.
- In recent years, households have saved less in order to sustain spending levels following soft growth in household incomes, so it will be interesting to see whether that trend has continued given continued weakness in wage pressures.
- Nominal GDP is likely to grow faster than real GDP both over the quarter and year. However, the annual rate is still likely to slow sharply as a large increase in the final quarter of 2016 is removed from the calculation.
The report will be released at 11.30am AEDT.
Business Insider will have all of the details once it hits the screens