GDP lifts and revisions push it higher still. In QLD public sector acts as a drag

Posted on September 5, 2018 by Pete Faulkner - GDP, QLD, State Accounts, Uncategorized

The second quarter GDP data released this morning came in somewhat higher than expectations (although the better than expected numbers came about largely from “statistical discrepancy’ adding 0.2 ppts). The market had been looking for real GDP to lift 0.7-0.8% for the quarter to give a 2.7% y/y figure. The result was actually a 0.9% q/q lift which, with some solid upward revisions to previous quarters, saw the year on year figure up at 3.4%; its fastest pace since the third quarter of 2012.

Contributions to growth came from household consumption (up 0.7% q/q and adding 0.4 ppts to GDP), government consumption which added 0.2 ppts and net exports which added 0.1 ppts.

The ABS also provide us with quarterly data for State Final Product, which is the domestic component of the states economy. Data for Gross State Product (which includes the international and inter-state elements) is only available from the ABS on an annual basis and we won’t get that until November. However, the QLD Treasury do provide quarterly estimates for Gross State Product (albeit rather delayed) and a week or so ago we got their data for the first quarter of 2018.

The seasonally adjusted data showed just a 0.1% lift in State Final Demand or a 3.4% y/y increase. However, at the state level we much prefer the less volatile Trend series.

The QLD Treasury data for Q1 showed State Final Demand grew 0.9% which is now agreed by the ABS who revised up their original 0.5% Trend estimate to 0.9% with today’s release. The ABS have QLD’s Trend State Final Demand in Q2 lifting 0.7% q/q for an annual rate of 3.7% (up from a revised 3.6% in Q1) or a y/y rate of 3.4%. This annual rate now sits well above the original QLD Treasury estimate of 3.0% so we can expect to see some revision upwards in the next Treasury release. The slowing in growth in the second quarter is due almost entirely to a sharp slowdown in the public sector. Government consumption lifted just 0.7% q/q (after 1.3% growth in Q1) while public fixed capital investment was up 1.1% q/q (down from 1.5% in Q1).