Australia Q3 GDP likely to decline in Q3, weakness to be relatively short-lived

The third-quarter gross domestic product of Australia is expected to have declined on weaker-than-expected profits and government spending and stronger-than-expected inventories and wages. However, the weakness is likely to be relatively short-lived.

After the release of key partial indicators, Q3 GDP is expected to have declined 0.1 percent in the quarter. This is a sharp deceleration from the 0.5and 1.1 percent q/q gains in Q2 and Q1, and would see annual growth step down from 3.3 percent to 2.2 percent, ANZ reported.

The weakness in GDP looks to be quite broadly based, although business investment is down particularly sharply, with the recent Construction Work Done and CAPEX reports suggesting it will take around 0.5ppt off GDP growth in the quarter.

"Some slowdown in GDP growth would be consistent with the apparent loss of momentum in the labour market, but we are surprised by the extent of the weakness evident in the numbers," the report said.

Meanwhile, the AUD/USD is trading at 0.74, down 0.29 percent, while at 12:00GMT, the FxWirePro's Hourly AUD Strength Index remained neutral at -22.30 (a reading above +75 indicates bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex