Recession avoided (again) as GDP jumps

As expected, the Australian economy once again avoided a technical recession (two consecutive quarters of negative GDP) with a better-than-expected increase GDP of 1.1% for the 4th quarter of 2016. This took year on year growth to 2.4% (up from an upwardly revised +1.9% in Q3) for an annual growth over 2016 of 2.5% (unchanged from Q3).

The main drivers of growth were household consumption (which was up 0.9% q/q and added 0.5 ppts) and exports which added another 0.5 ppts. Also encouraging was the fact that private fixed capital formation turned positive for the first time in the year and added 0.2 ppts.

In Queensland things also turned more positive. State Final Demand was up 0.9% q/q (+1.8% y/y) which was the state’s best result since the final quarter of 2013. On an annual basis over 2016 State Final Demand was up 0.4% which is the first positive plot for this measure since the third quarter of 2014. Here too households were the main contributors with Trend growth of 0.7% q/q while private fixed capital formation was also up 0.5% q/q.

Bearing in mind that the State Final Demand figures do not account for export data, we can expect to see an even better result once the Queensland Treasury release their Gross State Product figures for the quarter given the strength of resource exports in recent quarters. However, we are still waiting on those numbers for the September quarter (with no release date set down so far) so heaven only knows when we’ll see the Q4 numbers!

The chart below makes clear the recovery in private investment that we’re seeing in QLD and the fact that total Public sector demand (from both expenditure and investment) continues to ease. The recovery we’re seeing in QLD is down to households and private sector firms investing, not the public sector.

The latest CONUS Quarterly is now available for download below.

CONUS Quarterly March 2017

2 replies
  1. Gene Tunny
    Gene Tunny says:

    Hi Pete, it’s interesting the s.a. and trend Qld SFD growth numbers are the same, even though the story is different. General Govt investment increased 13% in s.a. terms qoq, which is why I’d argue it is an important part of the good result for Qld in Dec quarter. That’s not to say it was sensible to increase public investment by that amount, of course.

    Reply
    • Pete Faulkner
      Pete Faulkner says:

      That’s a fair point Gene. I guess the reason for the divergence in the s.a. story and that told by the Trend will be to do with some lumpy Govt investment data in the s.a. numbers that are getting “ironed-out” in the Trend. Have to see if Q1 shows a drop in Govt Investment on the s.a. measure. Thanks for the comment.

      Reply

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