Just getting in some initial responses to the Australian GDP

The data is here:

+0.5% q/q

  • expected +0.6%,
  • Revision to the prior, +1.0% (from +1.1%)

and 3.3% y/y

  • expected 3.3%,
  • the prior is at +3.0%, revised from +3.1%

Some of the responses ....

Fast FT:

  • Australia Q2 GDP misses expectations
  • The Australian economy grew less than expected in the second quarter
  • As in the first quarter, private consumption and government expenditure were the drivers of growth

(Actually, exports were a very big driver in Q1)


  • Australian economy expanded at the fastest rate in 4 years

Key points:

  • Q2 final consumption expenditure +0.8 pct q/q
  • Q2 gross fixed capital expenditure 0.0 pct q/q
  • Q2 chain price index +0.9 pct q/q


  • "Despite a net exports subtraction, public demand is absolutely booming, with our analysis showing public capex is likely to accelerate further ahead"

ANZ (Justin Fabo):

  • GDP details a little soft
  • Stocks added 0.3ppts q/q
  • Household consumption soft at 0.4% q/q
  • LNG exports added 0.5ppts over the year
  • New dwelling investment is adding $5bn more to GDP each quarter vs 4 yrs ago. BUT it's slowing..


  • The report confirms Australia's 25th recession-free year
  • Q2 expansion was driven by 1.9% increase in government spending, adding 0.3 percentage point to growth

AMP Capital (big Aussie fund manager), Shane Oliver

  • Australian Q2 GDP +0.5%qoq and 3.3%yoy
  • Close to expected
  • Stronger than virtually all other OECD countries (US 1.2%yoy, EZ 1.6%, Japan 0.6%)
  • Slowdown in Australian Q2 GDP to 0.5%qoq from 1% in Q1 was inevitable after net exports added 0.8% in Q1
  • Mining investement was a big drag on Q2 GDP, offset by big contributions from public spending (volatile defence) & continued contributions from cons & dwelling
  • Productivity is strong at 2.9%yoy
  • Household saving rate high at 8% (was ~zero 13 years ago)
  • Inflation very weak (PCE deflator +0.9%yoy)
  • Terms of trade rose 2.3%qoq in March qtr reflecting stabilisation in commodity prices - early days but hit to national income may be over
  • Bottom line from Q2 Aust GDP ...is that Australia remains the Lucky Country! There always seems to be something keeping it going
  • We still see an RBA rate cut in November given risks on downside to ultra low inflation and a too high AUD, but given solid growth it's a very close call

more to come