Australia: Growth stumbles, consumer spending soft – Westpac

Analysts at Westpac, point out that the Australian output growth slowed to 0.3% in the September quarter, well below expectations (market median and Westpac 0.6%).

Key Quotes

“Annual real GDP growth has slipped to 2.8%; the June quarter annual growth figure was revised lower to 3.1% from 3.4% previously.”

“Consumer spending was the big surprise in the quarter, up only 0.3% compared to an already weak expected 0.5%. Services, for which there are limited partial indicators, contracted in the quarter, while vehicle operations (spending on fuel) also contracted.”

“With the low savings rate acting as a “floor” to spending stronger income growth will be required to support the Reserve Bank’s forecast of 3.0% consumption growth in 2019 and 2020. Westpac’s forecast is around 2.5%.”