After the surprisingly strong first quarter GDP data (see here), today sees the release of some disappointing data for the second quarter. Real GDP was up by just 0.2% for the quarter and 2.0% annually (against expectations of +0.4% and +2.2%).
As we noted yesterday upon the release of the Balance of Payments data, Net Exports were the main drag on growth, deducting 0.6ppts from GDP. Household consumption added just 0.3ppts which was the same as in the last quarter and at a similar level to where it has sat for the past 2 years. The biggest positive for growth was Government consumption which added 0.4ppts (the highest contribution from this sector in almost 7 years) driven largely by increases in defence expenditure.
The tiny (+0.1%) increase in Queensland State Final Demand reported for the first quarter has now been revised away to a 0.2% decline and the second quarter sees a further 0.8% drop. Over the course of the year Queensland State Final Demand is down 3.3%; its fastest rate of decline since Q3 2009. State Final Demand has now fallen for the past four consecutive quarters.
State Final Demand does not account for the impact of net exports from the state so tends to understate economic growth for a resource exporting state such as Queensland. Nevertheless, the Gross State Product data (produced only annually by the ABS but estimated quarterly by the QLD Treasury) showed declines in the last two quarters of last year and in the first quarter of this year was up by just 0.03%. Today’s data would suggest that the second quarter GSP figures are unlikely to be pretty.
Private sector investment has been the main culprit when it comes to the Queensland slowdown and this most recent data does nothing to change that. Private Investment fell by 5.7% for the quarter and by 19.5% from a year ago. Household consumption was up by 0.6% for the quarter and by 2.8% from the same time a year ago.
The CONUS Quarterly includes more information on today’s GDP numbers as well as an in-depth look at the Far North Queensland economic picture. It’s available for free download from our Reports page.