Via Westpac:
Public demand is expanding at an above trend pace as governments commit to new investment projects. This theme was evident in Q2.
Public demand grew by 2.2% in the quarter, adding 0.5ppts to quarterly GDP. We had expected a contribution of 0.3ppts.
Investment jumped 6.7% in the quarter and consumption increased by an above par 1.2%.
Implications for Q2 GDP
We have upgraded our Q2 GDP growth forecast to 1.0%qtr, 2.0%yr, lifted from 0.7%qtr.
The arithmetic is domestic demand 1.2%, inventories -0.6ppts and net exports +0.3ppts.
200k new peeps every year. Interest rates at emergency lows. Gubmint spending growth at 8.8% annualised and investment 27%.
Cripes that’s some stimulus. We’ve got a -0.4 QTR to drop out in September and still more upwards correction in weather disruption for coal in Q3 plus more LNG volumes so we could do 3.5% plus GDP by year end.
What a shame it’s all Botox!
