Booming economy and iron ore exports boost GDP growth
“The market expected 1.1 percent production in the quarter, but today’s data shows a large increase in inventories due to retail trade, as well as a smaller net export subtraction than forecast and a vigorous wage bill.
“These are expected to offset largely unchanged public demand and a further decline in profits as government subsidies are canceled.”
Andrew Tomadini, head of international statistics at the Australian Bureau of Statistics, said the record current account surplus reflected strength in commodity prices, including rising ore prices, which pushed up the value of mineral exports. to a new high during the quarter.
National Australia Bank economist Taylor Nugent said economic data released Tuesday showed the economy continued to grow and suggested activity was around 0.6% above levels of before the pandemic.
“Strong GDP growth is imprinted tomorrow [Wednesday] would also be consistent with the strength observed in the labor market, showing that activity has increased in line with the increase in employment and supports the prospects for continuous improvement in the future, ”he added.
Tom Kennedy of JPMorgan said the new data was “generally in favor of printing tomorrow’s first quarter real GDP,” and prompted the economist to increase his tracking estimate of quarterly GDP growth to 1.0 percent 0.6 percent.
Net exports are now expected to subtract just 0.6 percentage point from the March quarter national accounts – well below the 1.1 percentage point deduction expected by economists.
Mr Kennedy of JPMorgan said the forecast error was due to surprisingly strong agricultural exports.
Business inventory investment is also expected to deliver an unexpected 0.8 percentage point increase in GDP on Wednesday, with data released Tuesday showing inventories rose a solid 2.1% in the March quarter, thanks the replenishment of depleted stocks by retailers.
Retailer inventories rebounded 6.6% in March, following a steady decline in on-hand inventories throughout 2020 as Australians developed an insatiable appetite for products such as office furniture, housewares and home appliances. household appliances due to the shift to work from home.
Mr Nugent, of NAB, said some companies may be building up their stocks due to uncertainties surrounding global supply chains.
One of the main uncertainties surrounding the March quarter GDP figures, according to Hanlan of Westpac, was the extent to which instant lockdowns in the first few months of the year affected household spending.
ANZ-Roy Morgan’s weekly consumer confidence figures released on Tuesday showed a 2.5% drop in sentiment, alongside Victoria’s instant lockdown.
However, he said survey data showed that short lockouts do not have a lasting effect on consumer sentiment, although the impact of the latest lockdown may have a more lasting effect on confidence due to the absence of JobKeeper.
Meanwhile, permits to build new homes hit their highest level ever in April, according to data released by ABS, as the government’s HomeBuilder program sparked a boom in private sector construction activity. that pushes the industry to its limits.
Approvals of new free-standing homes rose 3.4% in April to 15,160 on a seasonally adjusted basis, the highest monthly total since registrations began in 1983.