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Wednesday, September 5, 2012
UBS and HSBC reactions to GDP (interesting)
The message is loud and clear: Australian growth was strong in the first half! GDP rose by +3.7% y-o-y to Q2, in line with the market and a little above our own forecast. Growth ran at an annualised +4.1% in H112, up from +3.3% in H211. Mining investment was a key support, as expected, but household consumption growth was also above trend. Housing investment fell, as did manufacturing output, to make way for the mining expansion.
GDP rose 0.6% in Q2, broadly as expected (UBS & mkt +0.7%), but nonetheless a relatively strong result after an upwardly revised 1.4% jump in Q1 (was +1.3%). While the y/y pace slowed to a still above trend 3.7% (from 4.4% y/y in Q1), the 1H12 ann. growth is strong at 4%, compared with 3¼% in 2H11 and 2% in 1H11.
* In Q2, the key drivers were relatively broad-based, with private consumption up 0.6% q/q (+4% y/y…running solidly above trend) adding 0.3%pts to growth, and a 2% gain in non-resi capex (+48% y/y…worth 3%pts of the economy’s 3.7% y/y) adding 0.2%pts in Q2. Overall private demand was up 0.6% q/q (+0.4%pts to GDP) to be up a very strong 7% y/y. Public demand also rose strongly, +1.9% q/q in Q2 (2.4% y/y…below trend) worth 0.5%pts, adding to net exports of 0.3%pts (as exports rebounded). On the other side of the ledger, resi fell 1.7% (-0.1%pts, -7% y/y), inventories dragged 0.3%pts and equipment capex was flat (+4% y/y).
* Overall, real GDP has annualised 4% in 1H12, as consumer spending and export volumes have lifted – and the previous drag from weak public demand has eased – more than replacing a solid, but slower pace of overall capex spending. At 3.7%, today’s GDP print in line with the RBA’s 3¾% forecast.