The Australian economy has likely lost some momentum from its recent heady expansion due to a cooling housing market.
But economists still expect Wednesday’s quarterly national accounts will show the economy is growing at an annual rate above 3 per cent, ensuring further solid employment gains in the coming months.
Economists’ consensus forecast for the national accounts – a comprehensive guide to the state of Australia’s $1.8 trillion economy – is for a growth rate of 0.6 per cent in the September quarter.
This comes after a solid 0.9 per cent expansion in the June quarter, but would still leave the annual rate at 3.3 per cent and a shade below the 3.4 per cent pace recorded as of June.
Forecasts range from a 0.4 to 0.9 per cent rise in growth.
“It will still be a decent outcome,” Commonwealth Bank chief economist Michael Blythe, who is predicting a 0.7 per cent rise in the quarter, told The New Daily.
“That’s still well above what most people would say is above potential for the economy.”
Westpac senior economist Andrew Hanlan believes risks to the result are tilted to the downside.
“Momentum has eased back in the second half of 2018, heading into 2019, with the cooling of the housing sector, in both prices and activity,” he stated in Westpac’s weekly report.
The latest CoreLogic housing data released on Monday show prices nationwide dropped 0.7 per cent in November – the largest fall since the 2008-2009 global financial crisis.
Prices are now down 4.2 per cent since peaking in October last year.
However, Mr Hanlan said this house price correction was occurring against the backdrop of a robust economy, with government spending expanding at a brisk pace and elevated commodity prices boosting exports, profits and tax revenue.
New figures produced by the Australian Bureau of Statistics on Monday showed company gross operating profits grew 1.9 per cent in the September quarter to a record $90.2 billion.
Profits were up a hefty 13.5 per cent over the year.
Even so, Mr Hanlan said while wages growth is off its lows, it is still running at a sluggish pace.
“This, and high debt levels at a time of declining house prices, is a headwind for the consumer,” he said.
Retail spending figures for the September quarter released last month showed growth of just 0.2 per cent after a 1 per cent rise in the previous three months.
Deloitte Access Economics partner Chris Richardson expects the national accounts will be a good news story, showing inflation is still relatively restrained and a interest rate rise by the Reserve Bank is still some way off.
In particular, Mr Richardson is expecting a positive outcome on national income growth.
“Among other things, that will give you a feel how for how much money the government will have in its kitty to play with ahead of this federal election,” he told Sky News.
The latest national accounts will feed into the Treasury’s forecasts in the mid-year budget review, due to be handed down on December 17.
Colin Brinsden is AAP’s former economics correspondent based in the Canberra Press Gallery.