Report Published: December 2016
Australia’s real GDP contracted -0.5% in the September quarter, pulling annual growth down to 1.8% from 3.1% in the June quarter. We have consistently maintained that annual growth above 3% was unsustainable. The September quarter decline was an aberration due to a number of specific factors, including weather related events, reversals of previous one-off boosts, plus one-off detractions in the quarter.
Dwellings investment, public consumption and capital expenditure, along with net exports, are expected to rebound in the December quarter. Household consumption expenditure is also expected to be stronger in the December quarter, but annual growth in consumer spending will remain soft at around 2.5% over the next year, before weakening further in early 2018.
Total private investment is forecast to decline by around -3% over the next two years, which will only be partially offset by new public investment increasing by around 8% over those two years. Overall, GDP growth is forecast to increase 2.5% in 2016/17 (compared to our September Conference prediction of 2.9%) with growth to pick up slightly to 2.7% in 2017/18, before weakening in 2018/19.
The US Federal Reserve increased rates by 0.25% on its benchmark interest rate in mid-December. BIS Shrapnel anticipates another two rises next year. Rising US benchmark rates will put upward pressure on US and Australian bond rates, with the higher short and long term rates putting upward pressure on Australian banks’ funding costs – increasing the likelihood of out-out-cycle increases in local lending rates. Nonetheless, the narrowing of the differential between US and Australian interest rates will put downward pressure on the A$, which will improve our competitiveness, boost the tradeables sectors and foster structural change.
Topics in this month’s Bulletin:
- Economy slips in the September quarter but no chance of recession
- Rising US interest rates to improve Australian competitiveness
- State of Play - jobs and retail spending improve, motor vehicle sales weakening
- Investment and Construction to decline next 2 years, but differences between sectors
- Profits Analysis and Industry Outlook to 2017/18
- Analysis of December quarter Consumer Price Inflation
- Outlook for manufacturing - are higher gas and electricity prices offsetting the benefits from a lower dollar?
- Forecasts of exports and imports by category
- Update on global economic outlook - how are perceptions changing due to Trump?
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Adobe PDF document files for download by subscribers.
EO BULLETIN DECEMBER 2016/JANUARY 2017 (pdf, 1.16 MB)
EO BULLETIN NOVEMBER 2016 (pdf, 663 KB)
EO BULLETIN OCTOBER 2016 (pdf, 684 KB)
EO BULLETIN SEPT 2016 (pdf, 758 KB)
EO CHARTBOOK SEPT 2016 (pdf, 1.80 MB)
EO BULLETIN AUGUST 2016 (pdf, 1.53 MB)
EO BULLETIN JUNE-JULY 2016 (pdf, 1.11 MB)
EO BULLETIN MAY 2016 (pdf, 834 KB)
EO BULLETIN APRIL 2016 (pdf, 776 KB)
EO BULLETIN MARCH 2016 (pdf, 727 KB)
EO CHARTBOOK MARCH 2016 (pdf, 1.70 MB)
EO BULLETIN FEBRUARY 2016 (pdf, 1.16 MB)
Microsoft Excel spreadsheets and PDF files for download by online subscribers.
EXCHANGE RATES – WEEKLY (xls, 2.30 MB)
INTEREST RATES – WEEKLY (xls, 2.09 MB)
STOCK PRICES – WEEKLY (xls, 5.74 MB)
COMMODITY PRICES – WEEKLY (xls, 1.79 MB)
CALENDAR OF RELEASES AND EVENTS (pdf, 19 KB)
LATEST DATA AND FORECASTS
Microsoft Excel spreadsheets and PDF documents for download by online subscribers.
STATE INDICATORS UPDATED 22.12.2016 (xls, 1.05 MB)
COSTS & PRICES UPDATED 22.12.2016 (xls, 613 KB)
EXTERNAL SECTOR UPDATED 22.12.2016 (xls, 1.14 MB)
FINANCIAL INDICATORS UPDATED 22.12.2016 (xls, 1.84 MB)
BUSINESS INDICATORS UPDATED 22.12.2016 (xls, 877 KB)
ECONOMIC INDICATORS UPDATED 22.12.2016 (xls, 1.67 MB)
PDF document files for download by online subscribers.
DEC 2016/ JAN 2017 – ECONOMY SLIPS IN THE DECEMBER QUARTER BUT NO CHANCE OF RECESSION (pdf, 99 KB)
DEC 2016/JAN 2017 – RISING US INTEREST RATES TO IMPROVE AUSTRALIAN COMPETITIVENESS (pdf, 45 KB)
DEC 2016/JAN 2017 – STATE OF PLAY - JOBS AND RETAIL SPENDING IMPROVE, MOTOR VEHICLE SALES WEAKENING (pdf, 36 KB)
DEC 2016/JAN 2017 – INVESTMENT AND CONSTRUCTION TO DECLINE NEXT 2 YEARS, BUT DIFFERENCES BETWEEN SECTORS (pdf, 129 KB)
DEC 2016/JAN 2017 – PROFITS ANALYSIS AND INDUSTRY OUTLOOK TO 2017/18 (pdf, 88 KB)
NOV 2016 – TRUMP PRESIDENCY AND WHAT IT MEANS FOR AUSTRALIA (pdf, 53 KB)
NOV 2016 – RETAIL TRADE ANALYSIS (pdf, 78 KB)
NOV 2016 – EDUCATION SERVICES EXPORTS (pdf, 40 KB)
NOV 2016 – OUTLOOK FOR EMPLOYMENT BY INDUSTRY SECTOR (pdf, 172 KB)
OCT 2016 – STATE OF PLAY (pdf, 52 KB)
OCT 2016 – INFLATION RISES BUT REMAINS LOW. IS DEFLATION A RISK? (pdf, 33 KB)
OCT 2016 – COMMODITY PRICES ARE RECOVERING – SUSTAINABLE RALLY OR A FALSE DAWN? (pdf, 71 KB)
OCT 2016 – OUTLOOK FOR STATES (pdf, 201 KB)
SEPT 2016 – ECONOMIC OVERVIEW – PRIVATE DEMAND IS STILL SUFFERING FROM POST GFC WEAKNESS. (pdf, 124 KB)
SEPT 2016 – DETAILED GDP, INCOME, EXPENDITURE AND INVESTMENT FORECASTS (pdf, 118 KB)
SEPT 2016 – PROFITS AND INDUSTRY ANALYSIS; CONSTRUCTION AND INVESTMENT OUTLOOK (pdf, 272 KB)
SEPT 2016 – STATE OF PLAY (pdf, 131 KB)
SEPT 2016 – GROWING PART-TIME EMPLOYMENT MEANS CHANGES TO PRODUCTIVITY MEASURE.PDF (pdf, 190 KB)
AUG 2016 – STATE OF PLAY (pdf, 450 KB)
AUG 2016 – WITH PRICE AND WAGE INFLATION LOW, WILL THE RBA CUT RATES AGAIN? (pdf, 436 KB)
AUG 2016 – AN UPDATE ON THE INTERNATIONAL ECONOMY (pdf, 813 KB)
AUG 2016 – IMPACTS OF THE CAR MANUFACTURING SHUTDOWN (pdf, 572 KB)
JUNE/JULY 2016 – GDP GROWTH OF 3 PER CENT UNSUSTAINABLE BEYOND THE NEAR TERM (pdf, 107 KB)
JUNE/JULY 2016 – CONSTRUCTION AND INVESTMENT OUTLOOK (pdf, 284 KB)
JUNE/JULY 2016 – NON MINING BUSINESS INVESTMENT ON A SLOW ROAD TO RECOVERY (pdf, 118 KB)
JUNE/JULY 2016 – FALLOUT FROM THE UK’S DECISION TO LEAVE THE EUROPEAN UNION (pdf, 336 KB)
MAY 2016 – STATE OF PLAY (pdf, 51 KB)
MAY 2016 – INTEREST RATE AND EXCHANGE RATE OUTLOOK (pdf, 134 KB)
MAY 2016 – INFLATION OUTLOOK (pdf, 112 KB)
MAY 2016 – BUDGET WRAP (pdf, 215 KB)
APRIL 2016 – STATE OF PLAY (pdf, 51 KB)
APRIL 2016 – TOURISM CONTRIBUTION TO GDP AND EMPLOYMENT (pdf, 142 KB)
APRIL 2016 – OUTLOOK FOR STATES (pdf, 246 KB)
MARCH 2016 – ECONOMIC OVERVIEW (pdf, 128 KB)
MARCH 2016 – STATE OF PLAY (pdf, 70 KB)
MARCH 2016 – CONSTRUCTION AND INVESTMENT OUTLOOK (pdf, 67 KB)
MARCH 2016 – OUTLOOK FOR INDUSTRY OUTPUT, PROFITS AND EMPLOYMENT (pdf, 79 KB)
FEB 2016 – WHY AUSTRALIA WON’T SLIP INTO A RECESSION? (pdf, 40 KB)
FEB 2016 – INTERNATIONAL ECONOMY – CURRENT STATE OF PLAY AND OUTLOOK (pdf, 69 KB)
FEB 2016 – COMMODITY PRICES SLUMP AMID THE TURMOIL – BUT SLOW AND MIXED RECOVERY EXPECTED (pdf, 71 KB)
FEB 2016 – HOUSEHOLD SPENDING UNDERPINNING GROWTH – RETAIL SALES, MOTOR VEHICLES AND EMPLOYMENT (pdf, 171 KB)
FEB 2016 – PROSPECTS FOR INFLATION (pdf, 43 KB)
Microsoft Powerpoint, Excel and Adobe PDF document files for download by online subscribers.
EO BULLETIN SEPT 2016 (pdf, 758 KB)
EO CHARTBOOK SEPT 2016 (pdf, 1.80 MB)
EO CONFERENCE SLIDES SEPT 2016 – PART 1 (ppt, 1.02 MB)
EO CONFERENCE SLIDES SEPT 2016 – PART 2 (ppt, 862 KB)
EO CONFERENCE SLIDES SEPT 2016 – ENGINEERING CONSTRUCTION OUTLOOK (ppt, 1.81 MB)