Earlier 'responses' post here: Australia Q1 GDP data a beat - responses (and some the 'yeah ... but' takes)
- Data here: Australia Q1 GDP +1.0% q/q (expected 0.9%)
CBA, some snippets:
Real GDP … stepped up to an above-trend 3.1%
- Growth was broad-based over the quarter - there were positive contributions from household consumption, business investment, dwelling investment, net exports and public demand.
a solid lift in output
Employment growth was strong over the past year, but the output side of the economy over 2017 hadn't reflected the lift in headcount. Today's figures suggest there's been a convergence
- So the GDP data now marries up with the strong growth in jobs.
- And it supports both the RBA's and Treasury's expectations that growth should be above-trend at around 3% over 2018.
- Despite strong growth, the economy is not generating much in the way of wage or price pressures.
CBA on the consumer …. not so bad they say:
Consumer spending … Smoothing out the past two quarters provides a better gauge of the household expenditure pulse. On that basis, spending growth has been respectable over the past six months and annualises out at 2.8%
- The reasonable result reflects the competing forces of weak wages growth (which weighs on spending), but significantly more people in paid employment (witch supports overall expenditure).
Business investment
- forward looking indicators suggest that the exceptional growth in non-miring investment over the past year won't be repeated in 2018. But with the drag on total investment from the resources sector broadly complete, overall investment growth should be stronger this year compared with last.
Monetary Policy
- We don't think today's data shift the needle for the near term outlook for monetary policy
- But it adds weight to the RBA's view (and ours) that the next move in rates is expected to be up rather than down
- From a near term monetary policy perspective, trends in the labour market (in particular wages and unemployment) and the housing market (in particular credit and prices growth) are the ones to focus on. At this juncture they are consistent with the cash rate staying on hold for the remainder of the year
