Later this morning the Australian Bureau of Statistics (ABS) will release Australia’s March quarter GDP report, something that is almost certain to show that economic growth accelerated sharply in the first three months of the year.
Here’s the state of play.
- The last time the Australian economy was in recession — defined as two consecutive quarters of negative economic growth — was the June quarter of 1991, nearly a quarter of a century ago.
- That’s 98 quarters without a recession, second only to the Netherlands with 103 in terms of an uninterrupted period of growth for a developed nation.
- The last time the economy contracted was the March quarter of 2011 following devastating floods that struck Australia’s third-largest city, Brisbane. Since then, the economy has expanded for 19 straight quarters.
- In the December quarter of 2015, Australian GDP grew by 0.6% in seasonally adjusted chain volume terms, leaving the year-on-year increase at 3.0%, the fastest pace seen since the September quarter 2012.
- The result was driven by strength in household final consumption expenditure and public gross fixed capital formation. In other words, household spending and government investment.
- Turning to today, economists are forecasting that economic growth likely accelerated in the first three months of the year.
- According to a poll conducted by Bloomberg, the median economist forecast is for an increase in GDP of 0.8%, something that will see the year-on-year rate slow slightly to 2.8% if realised.
- Some banks such as the CBA and NAB are far more bullish, forecasting a whopping quarterly gain of 1.1%.
- Outside of the headline figures, economists at ANZ will be looking at readings on average non-farm weekly earnings, a broad measure of wage growth, along with unit labour costs, citing their potential to be influential on the outlook for Australian interest rates. “Any disappointment in the measures of wages will heighten fears that inflation will remain lower for longer,” says ANZ.
- While real GDP (measured in volume) is tipped to grow strongly, it’s safe to say many will be keeping en eye out on real net national disposable income, something the ABS describes as “a measure of the economic well-being of Australians”. It fell 0.1% in the December quarter, leaving the year-on-year decline at 1.1%.
- Keeping on the income theme, Gareth Aird, senior economist at the CBA, will be paying extra attention to nominal GDP, that which is unadjusted for price movements, suggesting that it is “the broadest measure of income in the economy”.
- “Output growth is simply not generating income growth the way it has previously because of falls in commodity prices and spare capacity in the economy,” says Aird, adding “this is why the economy feels weaker than the headline GDP numbers imply”.
The report is scheduled to hit at 11.30am AEST.
Business Insider will have full coverage as soon as it drops.