The focus is not on data today - but here is this anyway. Read it when we've all calmed down a bit maybe.

Data is here BTW:

Westpac on the data earlier today

Retail report

main surprise was around prices - discounting in non-food sectors even more aggressive than the Q4 CPI had suggested

  • Retail prices overall rose just 0.2%qtr and were down 0.1%yr - and non-food retail prices were down 0.9%qtr, 2%yr
  • The sub-category detail showed a solid 0.7% gain for food retail in the Dec month but sales down across all other categories led by material retracements in household goods (-2.6%) and 'other retail' (-1.8%mth), the categories most affected by one-off positives in Nov

For the quarter as a whole, volumes posted strong gains for household goods (+3.4%), clothing (+2.1%) and department stores (+2.3%) and a solid rise for cafes and restaurants (+1.6%) but declines for food (-1.2%) and 'other retail' (-0.6%qtr).

Overall, the report confirms a solid recovery from the weak September quarter but suggests price competition in non-food sectors is fierce.

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trade position was materially weaker

Adding to the surprises ..

  • October was revised to a surplus of $193m, from a deficit of $302mn, and November was revised to a surplus of $36mn, from a deficit of $628mn.

Imports were the main source of surprise in December

  • spiking 6.0%, $1.9bn in the month of December
  • The spike was relatively broadly based, consumption goods +4.9%, capital goods +5.9%, intermediate (ex fuel) +5.1%, while fuel and gold together rose by $0.7bn
  • Most likely there has been some clustering of import arrivals around the turn of the year, which points to a correction in January.
  • Around this time last year, imports also jumped, up 4% in January, with a subsequent 4.7% drop in February

Exports increased, but by less than anticipated

  • Iron ore, coal and LNG all improved on a combination of higher prices and increased volumes, but there were partial offsets from rural goods, services and metals

Turning to the December quarter, the monthly trade figures report a deterioration in the trade balance from a $2.3bn surplus in Q3 to a $1.1bn deficit in Q4. However, the ABS advise that using quarterly seasonal factors, the deterioration is less pronounced, with a Q3 surplus of $1.95bn and a Q4 deficit of $0.6bn.

  • The terms of trade was likely broadly flat in the quarter, in our view. That implies that real net exports will be a drag on growth in Q4.
  • Our initial figuring estimates that real net exports will subtract around 0.5ppts from Q4 GDP, exceeding our earlier expectation of 0.3ppts.
  • Import volumes are expanding to meet rising domestic demand, while the uptrend in export shipments was punctuated by a dip in Q4, with a decline in export volumes appearing to be relatively broadly based across resources, services and rural goods.
  • The uptrend in export volumes is likely to resume in early 2018.