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Anz Gdp q1 2013 Gdp Preview (4 June 2013)

Anz Gdp q1 2013 Gdp Preview (4 June 2013)

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Justin FaboHead of AustralianEconomics, Corporate andCommercial
+61 2 9227 1646 justin.fabo@anz.com
FINAL AUSTRALIAN Q1 2013 GDP PREVIEWANZ: +0.8% q/q, +2.7% y/yLast: +0.6% q/q, +3.1% y/y
After digesting the various partial indicators,
we have lowered our Q1 GDPgrowth forecast to +0.8% q/q
from the preliminary estimate of around1% q/q. Our bottom-up expenditure-side (GDP(E)) growth forecasts bycomponent are presented in Figure 1.
The underlying themes that we initially expected from the national accounts,however, remain unchanged. That is,
domestic final demand growth islikely to have been weak again in Q1 and the traded sector contributedsignificantly to GDP growth.
We expect Q1 expenditure-based GDP growth to have been a little higher thanour average GDP estimate, with our estimate of income-based GDP growth alittle lower.
Australia’s terms of trade rose a solid 2.7% q/q in Q1.
As a result, realnational income – i.e. real GDP adjusted for the terms of trade – is expected tohave risen by more than real GDP in Q1. Nominal GDP growth is expected tohave been around 1.7% q/q and 3.4% y/y. Importantly, the prices of Australia’sbulk commodity exports, particularly iron ore, have weakened again recently.
y/y % changeCont’n to q/qgrowth (ppts)Dec-12Mar-13Mar-13Mar-13
Real GDP (A)
Household consumption0. investment2. investment
- machinery & equipment-2.5-3.2-0.8-0.2New building3.8- engineering3.7-1.512.2-0.1
Underlying business investment
Public demand
Underlying public demand
Domestic final demand0.
Change in inventories (contribution to growth)-0.4-0.3-0.7-0.3Gross national expenditure- exports (contribution to growth) discrepancy (E) -- -- ---0.2
1. Not adjusted for net purchases of second-hand assets2. Excluding net purchases of second-hand assets
q/q % change
Sources: ABS, ANZ
Australian Economic Update / 4 June 2013 / 2 of 4
Household consumption is expected to have risen by around 0.8% q/q inQ1.
Retail trade volumes increased by a strong 2.2% q/q in Q1 and while thesedata are not a direct input into the GDP numbers, it might suggest some upsiderisk to our consumption growth forecast. Motor vehicle sales growth appears tohave eased substantially in the quarter.
Dwelling investment is forecast to have been broadly unchanged in Q1.
Building approvals figures point to slower growth in new house construction in Q1than in Q4 2012 and weakness in alterations & additions. The
Construction Work Done
release led us to downwardly revise our forecast for total dwellinginvestment growth from +0.6% q/q to be broadly unchanged.
Partial indicators of new private business investment printed weakerthan we had expected.
release suggested that machinery andequipment investment fell sharply again in Q1, possibly by around 3% q/q. The
Construction Work Done
releases together point to a contraction innew non-residential building and engineering construction in Q1. Putting all thistogether, we expect new business investment to have fallen close to 2% q/q.
Government Finance Statistic
suggest that underlying publicdemand contributed around 0.3ppts to Q1 GDP growth.
This was strongerthan we expected. Public consumption grew 0.5% q/q in Q1 and new publicinvestment was estimated to have risen a sharp 4.9% q/q following significantweakness in the prior two quarters.
Business Indicators
release suggested that
private non-farminventories are likely to have subtracted around 0.1ppts from Q1 GDPgrowth.
We assume minimal effects from farm and public-sector inventories.
Net exports contributed 1.0ppt to Q1 GDP growth based on today’s
Balance of Payments 
This was a little stronger than our 0.8pptexpectation, driven by stronger-than-expected exports growth. There was amodest upward revision to net exports’ contribution to growth in Q4 2012.
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This publication is distributed in Australia by Australia and New Zealand Banking Group Limited (ABN 11 005 357 522)(“ANZ”). ANZ holds an Australian Financial Services licence no. 234527. A copy of ANZ's Financial Services Guide is available athttp://www.anz.com/documents/AU/aboutANZ/FinancialServicesGuide.pdf and is available upon request from your ANZ point of contact.If trading strategies or recommendations are included in this publication, they are solely for the information of ‘wholesale clients’ (asdefined in section 761G of the Corporations Act 2001 Cth). Persons who receive this publication must inform themselves about andobserve all relevant restrictions.
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