Later this morning the ABS will release its December quarter GDP report. With most of the inputs now received, and the vast majority disappointing to the downside, expectations for economic growth are considerably lower than what was the case in Q3.
Here’s the state of play.
- Firstly, while still an important report, the GDP data is dated. It essentially tells you where the economy has been, not where it is going.
- The most widely recognised GDP measure is called the chain volume approach. It measures changes in the quantity of goods and services produced, removing the effect of price movements.
- In the September quarter 2015 the economy grew by 0.9%, the equal highest level since the March quarter of 2014.
- Strength in net exports, largely as a result of weather-related disruptions in Q2, along with a continued improvement in household consumption, more than offset weakness in private fixed capital formation and a small decrease in inventories.
- As a result of the substantial quarterly increase, the annual rate of growth accelerated to 2.5%, the fastest seen since the September quarter 2014.
- According to a survey of 20 economists polled by Thomson Reuters, the economy is tipped to expand 0.4% over the December quarter, leaving the annual growth rate unchanged at 2.5%.
- Expectations for the quarter range from growth of 0.2% to 0.6%.
- While the partial GDP inputs have been, on balance, soft, the largest contributor to economic growth – household consumption – won’t be known until the GDP report is released.
- We know that retail sales volumes increased by 0.6% over the quarter, but this accounts for only around 30% of household consumption. Expenditure on services is as yet unknown.
The ABS will release the Q4 GDP report at 11.30am AEDT.
Business Insider will have full coverage as soon as the data drops.