Queensland Gross State Product growth slows in Q4 as Net Exports detract from growth

The release by Queensland Treasury of the State Accounts for the fourth quarter of 2017 has finally appeared just a few days out from the State Budget next week.  While the ABS produce Gross State Product (GSP) data only on an annual basis for the June quarter, the QLD Treasury produce quarterly Trend estimates. We have previously seen some disparity in these two measures; the latest revised QLD data for the second quarter of 2017 appears to still be rather more positive than the second quarter data from the ABS (e.g. ABS data had annual GSP growth at +1.8% while the latest downwardly revised Treasury data has it at +2.7%). Past experience would suggest that we may well see the ABS data revised to close some of that apparent gap.

The most recent Treasury data shows GSP growth falling to +2.0% (annual) and +1.1% (y/y) for the fourth quarter, its slowest pace in 2 years. However, it also shows that the State has now recorded annual growth of at least 2% for the 8th consecutive quarter after over a year of sub-2% growth previously. Gross State Product rose 0.2% q/q in Q4 after a downwardly revised 0.1% increase in Q3. It’s worth remembering that GDP growth in Q4 was also weak (originally estimated at +0.4% and subsequently revised to +0.5%) but has been followed by much stronger growth in Q1 (+1.0%).

When we consider the breakdown of the data we see that it is household consumption that is responsible for most of the growth this quarter (up 0.5% q/q) with Private CAPEX also strong (+1.3% q/q). Government consumption was also strong (+1.2% q/q) although Public CAPEX fell by 2.7% q/q. This saw the domestic side of the economy, measured by Gross State Expenditure, increase by 0.7% q/q (in line with the original quarterly ABS Trend data for State Final Demand which was also estimated at +0.7% although the Q1 data released earlier in the week..see here for details…has revised that up to +0.8%).

It’s encouraging to see that, while private dwellings investment is flat-lining, we are seeing a pick-up in private business investment after the mining investment cliff; business investment was up 2.0% q/q for the December quarter.

Net exports (both international and interstate) saw QLD’s deficit increase by 6.9% q/q which detracted from growth. This was driven largely by a decline in international net exports which dropped by 13.8% q/q.

Considering the various contributions to Gross State Product we see;

  • Household consumption +0.28 ppts
  • Private CAPEX +0.27 ppts
  • Government Consumption +0.26 ppts
  • Public CAPEX -0.14 ppts
  • Inventories +0.11 ppts
  • Net Exports -0.54 ppts
  • GSP +0.2 ppts

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