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5 Jun 2013
Flash: Australian Q1 GDP suggests weakness ahead - Nomura
FXstreet.com (Barcelona) - Nomura economists note that Australian GDP grew by 0.6% q-o-q in Q1 2013 (2.5% y-o-y), in line with their expectations, but was slightly weaker than consensus and unchanged from Q4 2012 in quarter-on-quarter terms.
Overall, they comment that Q1 GDP report shows that growth was around trend. However, the composition of growth suggests that markets could see some weakness in coming quarters. They write, “First, the sharp increase in public investment is mainly the reversal of previous weakness and we expect it to grow at a more subdued pace in future. Second, the decline in investment in machinery and equipment suggests that the non-resource sector is not yet ready to increase its capital expenditure. Third, the weakness in dwelling investment and the construction sector is a further sign that the rotation from resource to non-resource sectors driving the economy will likely be bumpy unless there is improvement in this area.”
Overall, they comment that Q1 GDP report shows that growth was around trend. However, the composition of growth suggests that markets could see some weakness in coming quarters. They write, “First, the sharp increase in public investment is mainly the reversal of previous weakness and we expect it to grow at a more subdued pace in future. Second, the decline in investment in machinery and equipment suggests that the non-resource sector is not yet ready to increase its capital expenditure. Third, the weakness in dwelling investment and the construction sector is a further sign that the rotation from resource to non-resource sectors driving the economy will likely be bumpy unless there is improvement in this area.”