Australia: Q1 GDP comes on expected lines - TDS

Australian Q1 GDP came in as per market expectations, posting a growth of 0.3%/qtr, but the annual print was a touch higher than 1.6% consensus at +1.7% (the weakest rate of growth since Sep’09) as noted by the analysts at TDS.

Key Quotes

“GDP by state shows NSW and QLD were flat on the qtr, pointing to weather as a possible driver for the softer print.”

“Supporting weather as a driver is the drop in dwelling investment -4.4%/qtr.”

“All other states recorded growth in the qtr, except WA.”

“Consumption held up better than the retail sales data suggested, +0.5%/qtr, +2.3%/y, below 3.25% LT trend.”

“The household savings ratio dropped to a 10yr low to 4.7% suggesting households are digging into savings to finance consumption.”

“Services industries recorded strength in all categories, except 1 (note the RBA made no reference to soft capex in yesterday’s statement), supporting the notion that the transition away from mining is taking place.”

“Today’s data should provide the RBA with some breathing space and flush market expectations for a cut later this year with Q1 consumption holding up better than expected, growth flat or positive in all states (except WA) along with a strong contribution from services.”