GDP slows (as expected) while QLD grinds to a halt

Posted on June 7, 2017 by Pete Faulkner - CAPEX, GDP, QLD, Uncategorized

The ABS have released the GDP data for the first quarter of 2017. After a strong Q4 last year (unrevised at +1.1% q/q) Q1 is up just 0.3% q/q, +1.7% y/y and +2.3% annualised. This is result is in line with market expectations, although stronger than some had been expecting; there had been talk of a negative result. The initial result on the forex markets has therefore been to push the A$ somewhat stronger (up about 0.4 of a US cent).

The positive result is down to a strong contribution from Inventories (+0.4 ppts) while private and public investment and net exports all detracted from growth.

The less volatile Trend series shows growth at +0.4% (where it has sat for the past 3 quarters) with annual growth at just +2.2%, the weakest result since Q2 2010.

In Queensland we see State Final Demand unchanged in Q1 for a 1.6% increase over the same period a year ago and up just 1.1% for the year. This is however the first time that we’ve seen two consecutive quarters of positive annual growth in Queensland since Q3 2014. In Trend terms State Final Demand rose 0.4% q/q and as the second chart below shows is being kept positive by the impact of Public sector spending (most notably public CAPEX which is up 2.8% q/q) offsetting the decline in private CAPEX (down 0.9% q/q).