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Australia’s first-quarter gross domestic product (GDP) is expected to have risen 0.3 percent q/q. This continues the saw-tooth pattern evident in GDP over the past year or so and would see annual growth dip to 1.6 percent y/y, which would be the lowest rate since 2009.
GDP growth looks likely to be a little lower than current RBA forecasts, although it’s more difficult now to ascertain what the RBA’s quarterly profile is, given the deviation between the published forecasts in the graphs and table in its quarterly Statement on Monetary Policy.
While Australia looks to have dodged a negative GDP print, the soft growth outcome comes alongside persistent weakness in wages growth. Yesterday’s Business Indicators release showed that the wages bill rose just 0.3 percent in Q1, with the numbers suggesting that annual growth in unit labour costs will remain in negative territory in tomorrow’s GDP report.
"This ongoing weakness in unit labour costs will continue to feed through to lower inflation and puts a question mark over the RBA’s view that inflation is likely to accelerate back into the 2–3 percent target band over the next couple of years," ANZ Research commented in its latest report.
