From Westpac:
Q3 net exports: –0.2ppts
Net exports have been trending higher.
However, not so in mid-2016.
A subtraction of 0.1ppt in Q2 has been followed by a subtraction of 0.2ppts in Q3.
We had expected a contribution of 0.2ppts.
Exports provided the surprise, with volumes increasing by only 0.3% in Q3, constrained by a dip in goods, down 0.3%, while services rose 2.4%.
Import volumes, which trended lower in 2015, advanced in Q3, up 1.3%, with gains in goods and services.
The terms of trade increase was larger than we anticipated, 4.4% vs 3.5%.
The bounce in commodity prices is boosting export incomes, the terms of trade and national income.
Q3 public demand, -0.7%
Public demand consolidated after a Q2 surge, as we anticipated.
However, the point estimate was weaker than we had forecast, a -0.7% rather than a +0.1%.
Implications for Q3 GDP
We have downgraded our growth forecast from +0.2% to -0.2%.
This will see annual growth slow to 2.1%, moderating from an originally reported 3.3% for Q2.
Domestic demand contracted in Q3 we estimate, -0.4%, with falls in home building activity, business investment and public demand.
Inventories added to growth, with an unintended run-up in inventories.
We anticipate a modest 0.5% increase in private consumption, following a 0.4% increase in Q2.
UBS has also cut its GDP forecast -0.2 per cent, ANZ to -0.1 per cent and Citi to flat. That would be a result much more in keeping with the labour market, budget, wages, inflation and pre bulk boomlet profits.
