The first quarter GDP data released this morning was broadly in line with expectations as household consumption growth remained weak. Seasonally adjusted GDP rose 0.4% q/q for a year-on-year increase of just 1.8% (down from 2.4% in the previous quarter). The annual rate of growth now sits at 2.5%.
Contributions to growth came from household consumption (up just 0.3% q/q and adding 0.1 ppts to GDP), Govt Consumption which added 0.2 ppts and Net Exports which contributed 0.2 ppts to growth. Private fixed capital formation deducted 0.2 ppts while inventories deducted another 0.1 ppts.
Q1 data has Queensland State Final Demand (which does not include the external side of the economy from international and inter-state trade) up 0.4% q/q for a year-on-year increase of 1.3% (down from 1.6%) The domestic side of the QLD economy is experiencing a marked slow-down.
The slowing in growth in the first quarter is largely due to a slowdown in private sector investment, which fell 1.3% q/q. The Public sector saw solid growth with government consumption growing at 0.9% q/q and public investment up 4.0% q/q. However, although the total public sector grew at 1.5% q/q this was largely negated by the much larger private sector remaining unchanged. Household consumption managed just a 0.4% q/q lift but private capital expenditure fell (for the fourth consecutive quarter). (All QLD figures quoted are Trend)
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 three quarters of the 2018-19 financial year that projected growth may have to rely much more heavily on the export sector than anticipated.
Growth in the domestic QLD economy is coming almost exclusively from the public sector with private sector growth flatlining.
The CONUS Quarterly for June 2019, which includes analysis of today’s GDP release as well as a round-up of economic data for the Far North and QLD, is now available for download below.