Daily Commentary BY THE CURVE TEAM –

Softer Partial GDP Indicators Ahead of RBA Meeting

5th of September, 2017

It has been a busy 24hours domestically as we lead into the RBA’s monetary policy decision today. The impact of the GDP partials on the outlook will be the key for the RBA ahead of the final release tomorrow.

Following from the GDP partials we saw come through last week, yesterday’s release of business indicators for Q2 were a little softer.

After experiencing a 0.4% decline for the quarter, inventories look like they will act as a bit of a hindrance for GDP. Similarly, company profits fell 4.5% in line with expectations, largely attributed to the volatility in commodity prices. The uplift in commodity prices should bode well for Q3.

On a positive note, wages incomes grew 1.2% for the quarter following the positive trend of improving business conditions.

Based on the partials to date growth looks like it will be largely in line with the RBA forecast as stated in August’s Statement of Monetary Policy.

The final GDP partials will be out today ahead of the RBA’s meeting this afternoon. Strong business conditions and the growing presences of household debt will continue to be the key talking points.

Oliver Parsons

Client Relationship Officer