Australia: WCI did not disappoint at +0.6%/qtr - TDS

Australia’s WCI did not disappoint at +0.6%/qtr (TD +0.6%/qtr vs mkt +0.5%/qtr) while annual at 2.1%/y continues the "gradual" grind higher, notes the analysis team at TDS.

Key Quotes

“Dec qtr Construction Work Done (-19.4%/qtr) was at the lower end of expectations, but again only due to extremely lumpy and expensive LNG plants 'dropping out' of this report compared with Q2/Q3. Residential investment fell -1.9%/qtr, so that was disappointing (clearly the recent pop in building approvals is yet to translate into actual construction).”

“Skilled vacs for Jan accelerated to an annual pace of 10.6%/yr, the highest since Sept 2014. As we have been signalling since 31 Jan, we updated our RBA call in the wake of today's WCI. The sluggish wages pickup combined with lower-than-we-expected underlying inflation (and a patient RBA) has prompted us to drop our long-held May hike, but leave in place our November +25bps hike, for a year-end cash rate of 1.75%.”