Australia: Disappointing Q3 GDP numbers – TDS

Annette Beacher, chief asia-pacific macro strategist at TD Securities, explains that the Australian Q3 GDP disappointed the consensus by a wider margin as it limped higher by +0.3%/qtr.

Key Quotes

“We remain the optimists on the analyst spectrum as the RBA isn't targeting growth per se. We need to re-focus on employment, underutilisation, wages and hence inflation. Dec qtr CPI on 30 Jan and WPI on 20 Feb are the next key policy hurdles.”

“GDP expanded by "only" 2.8% in 2016 and 2.4% in 2017 and yet the labour market is robust and wages are rising, albeit gradually. The RBA expects growth to 'average around 3½% this year and next' while our 2018 and 2019 estimates are 3.0% (was 3.4%) and 3.1% (was 3.3%) respectively, on a mark-to-market basis.”

“With Sep qtr activity behind us, starting tomorrow we see modest upside for Oct retail sales (TD +0.4%, mkt +0.3%/m) and Oct trade balance (TD +$A3.25b, mkt +$A3b). Chinese trade for Oct hinted at a record import haul from China.”