- Australia Q1 GDP +0.6% q/q (vs. +0.7% expected & prior of +0.6%)
- For the y/y Q1 GDP +2.5% (vs. +2.7% expected and prior of +3.1%)
- Machinery and equipment investment declined by 6.9% (we have been talking about declining mining investment capex for a while now, so no surprise here)
- Household spending up only 0.6% for the quarter (annual growth of 2%, slowest since 2009)
- Non-dwelling construction up 7.6% (dwelling investment was flat)
- Public spending down 15.3%
- Growth over the last 12 months reads: 0.6% Q2 2012, 0.8% Q3 2012, 0.6% Q42012 and 0.6% Q1 2013. This is insipid growth
- Domestic demand contracted by 0.3% in Q1, (+0.1% in Q3 and +0.2% in Q4; annual domestic demand growth slowed to 1.1%, the weakest outcome since 2009)
- net exports +1% in the quarter
This is a weak report, demand is very much below trend, and will be an important consideration going into the next RBA meeting. The RBA keeps saying they have ‘scope to ease’ to ‘support demand’. I reckon next meeting they might have to back this statement with action again. I think the chance of a July rate cut has just jumped considerably.
AUD/USD has weathered the selling in the immediate wake of the GDP release, holding at 0.9600/10 bids and squeezing shorts to be 0.9642/45 now.
Earlier I posted Australian dollar orders, the topside levels are still in place
