Q4 GDP response from Westpac

(in brief, bolding mine)

  • Weak result in Q3 ... Since then, the election has passed, RBA rate cuts in 2016 are having some impact, the mining investment drag has eased, global commodity prices have surged and global conditions have improved.
  • Domestic demand grew by 1.2% in Q4, more than reversing a 0.4% dip in Q3, to be 2.1% above the level of a year ago. ... All components of domestic demand advanced in Q4. That includes business investment, which rose 1.9%, following 12 consecutive quarterly declines.
  • Consumer spending was a little stronger across the board... despite household incomes remaining under pressure ... Employment gains have been centred in part-time rather than full-time jobs and wages growth is weak
  • Spending was funded by a fall in the savings rate to 5.2% from 6.3%, a behaviour most evident in the mining states
  • Going forward, the labour market will need to strengthen to support a sustained increase in consumer spending.
  • Business investment grew by 1.9% in Q4, including a surprise 1.3% rise in infrastructure work. In trend terms, the mining investment drag is waning, with declines still expected near-term as work on gas projects is progressively completed in 2017.

Conclusion from WPAC:

  • The outlook for 2017 remains constructive
  • RBA rate cuts in 2016 are having some impact, housing finance has rebounded
  • The mining investment drag is waning
  • The Federal election is behind us - removing some uncertainty around public policy
  • The labour market is expected to improve, as suggested by forward indicators
  • Higher commodity prices are boosting national income and there will be a supply response, in coal for example
  • Global conditions have improved, supported by very expansionary monetary policy globally.