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3 Dec 2014
Australia: Calling for growth of 0.8% q/q - Westpac
FXStreet (Bali) - Sean Callow, FX Strategist at Westpac, notes that the bank has retained its call for growth of 0.8% q/q, 3.0% y/y despite the fact that they are highlighting downside risks on the quarter.
Key Quotes
"After the various inputs to the national accounts over the past week, Westpac has retained its call for growth of 0.8% q/q, 3.0% y/y but we are highlighting downside risks on the quarter (11:30am Syd/8:30am Sing/HK). Consensus is 0.7% q/q, an outcome which would not surprise us at all and would not faze the RBA either. There should be something for everyone in the breakdown. The GDP (expenditure) measure is shaping up well, aided by net exports, business investment (barely) and moderate consumption growth (we look for 0.6% and will watch this component closely)."
"But the income measure looks weak, as wages growth remains depressed by a slack job market and the terms of trade slide. Bears will be able to focus on this and certainly low nominal GDP growth is a large negative for the government’s mid-year fiscal review expected this month. 0.7-0.8% on the headline number (average the income, expenditure and production measures) should have little net impact on AUD. But there is always potential for a surprise."
"In Europe we will see the final estimate of Q3 GDP, with some risk of a tweak from 0.2% q/q to 0.1%. The US calendar is crowded. We will see Nov ADP private payrolls, expected solid again at 222k. The Nov non-manufacturing ISM is seen holding strong at 57.5. The Fed’s Beige Book of regional economic anecdotes is also due later in the session. The Bank of Canada should be firmly on hold at 1% yet again but there are often changes to the statement. We are broadly positive on the CAD outlook but obviously oil prices are a brake for now."
Key Quotes
"After the various inputs to the national accounts over the past week, Westpac has retained its call for growth of 0.8% q/q, 3.0% y/y but we are highlighting downside risks on the quarter (11:30am Syd/8:30am Sing/HK). Consensus is 0.7% q/q, an outcome which would not surprise us at all and would not faze the RBA either. There should be something for everyone in the breakdown. The GDP (expenditure) measure is shaping up well, aided by net exports, business investment (barely) and moderate consumption growth (we look for 0.6% and will watch this component closely)."
"But the income measure looks weak, as wages growth remains depressed by a slack job market and the terms of trade slide. Bears will be able to focus on this and certainly low nominal GDP growth is a large negative for the government’s mid-year fiscal review expected this month. 0.7-0.8% on the headline number (average the income, expenditure and production measures) should have little net impact on AUD. But there is always potential for a surprise."
"In Europe we will see the final estimate of Q3 GDP, with some risk of a tweak from 0.2% q/q to 0.1%. The US calendar is crowded. We will see Nov ADP private payrolls, expected solid again at 222k. The Nov non-manufacturing ISM is seen holding strong at 57.5. The Fed’s Beige Book of regional economic anecdotes is also due later in the session. The Bank of Canada should be firmly on hold at 1% yet again but there are often changes to the statement. We are broadly positive on the CAD outlook but obviously oil prices are a brake for now."