Surprise fall in Aussie GDP: What happened

One piece of information managed to shake me out of my flu induced daze for long enough to write a post – Australian GDP had a surprising fall over the December quarter, falling 0.5% (seasonally adjusted) on September.

Appears that inventory accumulation was knocked down sharply – that is very interesting.  Usually during a recession inventories are a positive contributor – as spending slows more quickly than production.  This implies to me that the fall in GDP may not be sustainable – as inventory accumulation will need to build back up.

As a result, even with a 0.5% fall this quarter, I’m not sure if we are going to see an Aussie recession (two quarters of negative growth) quite yet …

Of course – the steep fall in their terms of trade is concerning – but that is a story for when I’m actually able to think 🙂

2 replies
  1. Kimble
    Kimble says:

    The sharp drop in inventory levels could just be the result of the cash handout stimulus package back before Christmas, and lower expectations of demand due to the softening economy by suppliers, right?

    In which case, is the growth of inventory a given in the near term?

  2. Matt Nolan
    Matt Nolan says:

    I would be amazed if inventory volumes don’t pull back up. It looks to me like producers cut back expecting a fall in activity – which didn’t come.

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