Australian GDP: Blame the weather – HSBC

In view of analysts at HSBC, today’s headline print for Australian Q1 was weak, with real GDP growth of 0.3% q-o-q and 1.7% y-o-y (market had 1.6%), but most of the weakness is weather-related and therefore temporary.

Key Quotes

“Cyclone Debbie and wet weather on the East coast weighed on housing construction and exports. Timely indicators already suggest a bounce back. A clearer read of underlying conditions may be gleaned from surveyed business conditions, which are around decade-highs. And why shouldn’t they be? Corporate profits are up 30% y-o-y and nominal GDP rose by 7.7% y-o-y, its fastest pace in over five years. Add to this, Australia just set a new record for developed world growth, with a 26 year boom! If yesterday’s RBA announcement is any guide, the central bank is largely ignoring the volatile, weather-effected GDP numbers and looking at the business and labour market surveys, which still show trend improvement. We see the RBA on hold this year and a hike in early 2018.”