Via the SMH blog:
UBS interest rate strategist Matthew Johnson:
GDP was a bit better than what the RBA and the market were expecting but not really good enough to bring rate hikes into focus. There was a good increase in private consumption up 0.8 percent and that combined with exports is the driver of growth.
Overall, it’s good quality result but not great. What you want to see is more domestic activity and that should come through in terms of house building and possibly consumption. We still think rates are on hold this year.
CBA chief economist Michael Blythe
It’s a bigger increase than we’ve seen for a while, but we’re still running at a below-trend pace through the course of last year, but there are at least tentative signs of some momentum coming back, and, given where the leading indicators are, there’s more to come in 2014.
There’s a little bit of a pick up (in non-mining sectors) or at least the parts that are supposed to be picking up weren’t as weak as earlier data had led us to believe. So it does look like the transition is underway but it was clearly in the very early stages at the end of last year.
From an RBA point of view they will take some comfort from what they see is happening but it won’t see them shifting from their current stable, holding pattern on rates.
JPMorgan chief economist Stephen Walters
Slightly better than expected. Domestic spending actually went up, so there is a risk that could have gone down again. But you still get most of the growth coming from exports. Of the 0.8 (percent growth) over the quarter, 0.6 of that came from net exports, which is mainly a boost on the export side.
It’s getting slightly better as we go through the year. We’ve got essentially 3.0 per cent growth by the end of the year. Modest improvement, because we are still not getting that evidence that capital spending in particular outside mining is picking up yet.
Not much (implication for rates), it doesn’t really tell us anything we didn’t already know.
NAB senior eocnomist Spiros Papadopoulos
The household part of the economy is steadily improving, but uncertainty remains on the business investment side and just how much bounce we will get on the non-mining business investment front during the course of the year.
If we don’t see a significant bounce, we’ll see the unemployment rate rise.
We’ve got another rate cut expected before the end of the year, and these figures doesn’t change our view in any way.
RBC senior economist Su-Lin Ong
Year-on-year growth… that’s still sub-trend but it’s a tad stronger and consistent with the general view that the rate-sensitive sectors of the economy picked up pace in the last quarter of 2013 and the economy had a little bit more momentum.
The consumer was definitely stronger in the quarter and that has, to some degree, helped offset the drag on activity from weaker capex.
My own take is we had a decent post-election bounce and Christmas which offset the very earliest edge of the capex cliff. I expect some firming of consumption but no take off. Nothing here to change my view on more rate cuts ahead as the capex cliff falls away.
