GDP disappoints

The third quarter GDP data released this morning came in lower than expectations as household consumption growth tailed off. The market had been looking for real GDP to lift 0.6% for the quarter to give a 3.0% y/y figure. The result was just a 0.3% q/q lift which, with some downward revisions to previous quarters, saw the year on year figure down to just 2.8%.

Contributions to growth came from household consumption (up just 0.3% q/q and adding 0.2 ppts to GDP) and Net Exports which added 0.3 ppts to growth. Inventories deducted 0.3 ppts. With wages growth stuck around historically low levels (even though the latest wage price index showed a slight uplift to 2.3%), even this modest growth in household consumption continues to drive the household savings rate lower. It fell again this quarter to just 2.4%, its lowest rate since the end of 2007.

The ABS have QLD’s Trend State Final Demand in Q3 lifting just 0.1% q/q for an annual rate of 3.3% (down from a revised 3.5% in Q2) or a year on year rate of 2.5%. The seasonally adjusted data showed a 0.4% q/q/ drop for a year-on-year growth of 2.5% and an annual rate of 3.2%.

The slowing in growth in the third quarter is partly due  to a slowdown in the growth of the public sector. Government consumption lifted just 0.3% q/q (after 0.6% growth in Q2) while public fixed capital investment was also up 0.3% q/q (down from 1.0% in Q2). While household consumption managed a 0.5% q/q lift (slowest pace of growth since early 2016), private capital expenditure fell (for the second consecutive quarter) by 1.0%.

The QLD 2018-19 Budget estimates that Gross State Product will lift by 3.0% in the 2018-19 year on the back of “household consumption gaining momentum and a contribution to growth from the trade sector as imports ease”. On the evidence of these relatively weak household consumption figures in the first quarter of the 2018-19 financial year that projected growth may have to rely more heavily on the export sector than anticipated.

The CONUS Quarterly, which takes a look at today’s GDP data and includes a round up of Far North Queensland economic data, is available for download below.

CONUS Quarterly Dec 2018




  1. Gene Tunny says:

    December 5th, 2018 at 3:28 am

    Thanks Pete. Good analysis.

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