Australia Q1 GDP likely to rise on solid housing sector, strong consumer spending

Australia first quarter gross domestic product is likely to rise, following solid growth in housing sector and a strong recovery in consumer spending. However, sluggishness in business investment is unlikely to outweigh the strength in other sectors.

According to ANZ, the preliminary estimate for Q1 GDP is for a rise of 0.8 percent q/q. This result follows a moderate 0.6 percent q/q rise in Q4 and would see annual growth tick back down to 2.9 percent from 3.0 percent. This would be a solid headline result, although growth in the quarter looks to have been driven largely by net exports, while domestic demand growth remains soft, ANZ reported.

"On the income side, profits look to have been weak in the quarter, with our forecast of a fall of 1.8 percent in company profits driven by sharply lower export prices," ANZ said in a recent note.

Meanwhile, growth in the wages bill is expected to be relatively modest given softer employment growth. With the focus on weak wage growth at the moment, the average wage measure in the National Accounts will be of particular interest to policy makers, the report claimed.