The flow of data for the July to September months (i.e. the third quarter of 2021) has not been as dire as expected.
The economy is still expected to have contracted given the extended lockdowns in the states of New South Wales and Victoria (Australia’s largest and second-largest population states respectively, covering just under 50% of the country’s population), but estimates are being revised up a tuch.
This is the latest I have seen from Westpac:
- We have upgraded our Q3 GDP forecast from -4.0%qtr to -2.5%qtr, +3.2%yr.
- This incorporates the upside surprise on net exports and construction work, as well equipment spending. We have also moderated our expected decline in consumer spending, with the delta lockdown in Victoria seeming to be less disruptive than originally anticipated.
- By way of context, the labour force survey reports that hours worked contracted by -3.1% in the quarter, including a sharp -9.0% for NSW but a surprise +0.4% for Victoria.