Australian economic growth likely accelerated year-on-year in Q3 - ANZ

The Australian economic growth is expected to have accelerated strongly in the third quarter on year-on-year basis. According to an ANZ research report, the Australian economy is likely to have risen 3 percent year-on-year from previous quarter’s 1.8 percent growth. On a sequential basis, the economy is expected to have grown 0.7 percent, slightly slower than the 0.8 percent growth seen in the second quarter.

Australia recently recorded subdued net exports and stronger-than-anticipated inventories and government spending. Wages and profits were consistent with projections. The investment projections have more than the usual uncertainty around them this quarter, stated ANZ.

If these projections come true, it would be slightly stronger than the Reserve Bank of Australia’s forecasts in the most recent Statement on Monetary Policy. The household consumption and wages figures are expected to be of vital importance. Volumes of retail sales indicate towards a modest rise in consumption, with weak wages growth and high household debt providing a serious headwind to spending.

Business Indicators release yesterday indicated that wages bill grew strongly 1.1 percent in the third quarter. This, to a greater degree, reflects the strength in employment in the quarter; however, the GDP measure of the wage rate is expected to show some improvement from the dismal print for the second quarter.

“Overall, tomorrow’s report should underline the solid growth outlook for the economy. At the same time, however, we expect the wage and price measures to suggest ongoing weak inflation pressures”, added ANZ.

At 12:00 GMT the FxWirePro's Hourly Strength Index of Australian Dollar was slightly bullish at 71.9768, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 18.0592. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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