So on Christmas eve we get a special present – confirmation that we have so far had a three quarter recession 🙁
The main market in town, iPredict, is spot on with the 95% pick for a negative GDP quarter.
Let us discuss 🙂 :
Take GDP=C+I+G+X-M. C is our consumption. Retail sales collapsed, indicating that consumption is likely to carry on down the path.
I is our investment. Now we know that total work put in place fell. Furthermore, stocks were elevated in June, something that firms may look to have remedies over September. The PMI and manufacturing series suggests at least that manufacturing stocks have been run down.
X-M is net exports. Now, according to the trade indexes this measure will couldactually contribute to a net increase GDP this quarter – however, we will have a clearer idea when the Balance of Payments numbers are out.
G is most likely a positive contributor again – especially since it tends to be counter-cyclical.
How big will the fall be, the RBNZ picked 0.2%, the median economist is picking 0.5%, I would say a greater fall than 0.8% would be very concerning – especially since the recent vicious contraction in credit market would not have had any impact no the September quarter.