Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Sunday, 11 December 2016

GDP decline just a speed bump

GDP blip

Although real national income rose to record highs, GDP growth seized up and came in at -0.5 per cent for the third quarter

Mining contracted, manufacturing contracted slightly, and the construction sector slipped up quite drastically, largely driven by a quarterly slowdown residential building. 


Retail trade was also rubbish, though early indications suggest that this should rebound in the last quarter of 2016. 

The main reason for the decline in home building? Lots of rain! So that sector should bounce back in Q4 as well, at least in theory. 

In fact states other than Western Australia experienced the wettest May to September on record, according to the people that measure these things. 

There was also a significant retracement in public capital investment which hopefully shouldn't be repeated next quarter, as well as weakness in some sundry services sectors and statistical discrepancies which all contributed to a weaker than expected result. 

Rain can often bring growth too in time, as flood damages need repairing, for example.

And, indeed, agriculture grew nicely in Q3 too. 

Most importantly of all, over the next year or so it will gradually become 'easier' for the economy to grow, because mining capital investment will finally halt its decline after half a decade of sharp falls.

It's worth remembering, by the way, that the supposed link between GDP and property prices is seriously tenuous at best.