Australia: Activity is gathering momentum – TDS

Australian Jun qtr GDP rose by +0.8%/qtr, marginally disappointing the upwardly revised median of +0.9%/qtr, notes the analysis team at TDS.

Key Quotes

“The AUD sank from $US0.802 to $US0.799, but we are bullish AUD as the underlying story for the economy remains solid and the cash rate won’t be 1.5% forever.”

“What happened? We missed the public acquisition of the “recently completed Royal Adelaide Hospital from the private sector” which provided a decent offset to yesterday’s strong public spend report.”

“GDP expanded by 2.4% in 2016 and our 2017 tracking is also 2.4%. Our estimate for 2018 is for above-trend GDP growth of 3.2%, the same as the RBA.”

“The RBA Board yesterday elected to keep the cash rate at 1.5%, and we see the Bank remaining in its wait-andsee mode until well into 2018.”

“We look for tomorrow’s Jul trade balance (TD +$A635m; mkt +$A1b) and retail sales (TD +0.4%, mkt +0.2%) for Sep qtr updates. Our below-market trade forecast assumes another LNG plant is imported. If that is not the case there is considerable upside to our forecast.”