Australia half-way in recession? No - TDS

Annette Beacher, Chief Asia-Pacific Macro Strategist at TDS, notes that the Australian Q3 GDP fell by –0.5%/qtr, as expected by TD (after yesterday’s downward revision) but well short of the revised mkt f/c of –0.1%/qtr.

Key Quotes

“AUD sank 50 pips to retest $US0.742 but did not break through, while $US0.75 remains the sell-on-rally resistance level.”

“What happened to GDP? It was a perfect storm of dips and pauses all in the same quarter, of which some are temporary, some are not. Analysis of Sep qtr and our early tracking of Dec qtr are detailed below.”

“GDP expanded by 2.4% in 2015 and we have downgraded our 2016 estimate to a below-trend 2¼%. Our tracking for 2017 is now 2½% (RBA 3%).”

“The RBA Board yesterday elected to end the year in waitand-see mode, but is now likely to be anxiously datawatching for the degree of the Dec qtr turnaround.”

“We turn to tomorrow’s Oct trade balance (TD -$A1.5b, mkt -$A610m) and Friday’s housing finance for Oct for now crucial Dec qtr updates.”