It looks like Australian economic growth cooled a touch in the middle of the year

Chris Hopkins/ Getty ImagesMelbourne, Australia.
  • Australia has received the last of its partial Q2 GDP inputs with the release of Balance of Payments (BoP) and government finance figures.
  • Both were largely in line with expectation, and suggest GDP growth likely moderated a touch in the June quarter.
  • Before today’s data, the median economist forecast was for real GDP to increase by 0.7% during the June quarter.

The last of Australia’s partial GDP inputs are out with the release of Balance of Payments (BoP) and government finance figures for the June quarter.

They were in line with expectations, pointing to the likelihood that economic growth slowed a touch from the breakneck pace seen in the March quarter.

According to the Australian Bureau of Statistics (ABS), net exports will add 0.1 percentage points (ppts) to real GDP growth for the quarter, a result that matched the median economist forecast offered to Bloomberg.

“In volume terms, exports rose stronger than imports this quarter,” the ABS said.

The 0.1ppts boost was smaller than the contribution seen in the March quarter, even with a downward revision to Q1 data from the ABS.

Including price movements over the quarter, a trade surplus of $2.812 billion was recorded, down from a surplus of $3.344 billion in the first three months of the year.

Exports rose by $2.679 billion, or 3%, the same percentage increase recorded for imports which increased by $3.211 billion.

The ABS said Australia’s terms of trade fell by 1.3% after seasonal adjustments as prices for exports increased by 1.4%, below the 2.7% lift in import prices.

Along with the trade surplus narrowing during the quarter, the ABS said the net primary income deficit widened by $1.102 billion to $15.934 billion, resulting in Australia’s current account deficit widening to $13.472 billion, above the $11.5 billion level expected.

The primary income account shows income flows between residents and non-residents over the quarter.

ABS

Like the contribution from trade, separate data on government spending will also add moderately to GDP.

Government consumption expenditure increased by $859 million, or 1.0%, compared to the June quarter, an outcome the ABS estimates will add 0.2 percentage points to quarterly GDP.

Including asset transfers, government investment was nearly unchanged, falling by $7 million from the prior quarter. The ABS said this would not contribute to economic growth in the June quarter.

Before today’s data, the median economist forecast for quarterly GDP growth was centered around an increase of 0.7%, leaving the change on 12 months earlier at 2.8%, down from the 3.1% level reported in the March quarter.

There has been negligible financial market reaction to the data, suggesting there has been little change to those initial views.

Australia’s Q2 GDP report will be released on Wednesday, September 5.

With all of the partial inputs now in place, all that’s left is to see what contribution household consumption made to quarterly growth. That won’t be known until the report is released, although we already know that retail sales were strong during the quarter.

Was that increased matched by spending on services? That’s the only key question that remains.

Gareth Aird, Senior Economist at the Commonwealth Bank, thinks it will.

We expect to see a decent set of numbers after a strong first quarter,” he says.

“Based on the economic information to date, we have forecast Q2 GDP at +0.7%. If correct, annual growth will step down a little to a trend-like 2.8%.”

Aird is expecting a decent lift in household consumption after a soft first quarter, particularly from retail sales.

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