The AMP and NAB expect net exports to drop at least 1 percentage point from next week’s GDP figures, which must be offset elsewhere. The softer construction figure also reduced NAB’s forecast by 0.5 percentage points.
“Weaker than expected result poses a downside risk to our second quarter GDP forecast of 0.2% [quarter over quarter], increasing the risk of a flat or even negative second quarter impression, ”NAB economist Taylor Nugent said.
The optimist in me tells me that we can still have a good rebound in the December quarter or more significantly through 2022.
– Shane Oliver, Chief Economist of AMP Capital
Residential construction stagnated in the three months to the end of June, falling 0.1% despite an increase in housing permits. Private work on homes edged up 0.1 percent, following a massive jump of 12.3 percent in the first quarter, while work on other housing fell 0.5 percent.
“In itself, this suggests a downside risk to the forecast in next week’s second quarter GDP report,” said Catherine Birch, senior economist at ANZ.
Mr Oliver said a moderate result would raise questions about the strength of the economy beyond lockdown rebounds, although he noted there was still a slew of economic data to come next week .
“The optimism in me tells me that we can still have a good rebound in the December quarter or more significantly through 2022,” he said.
Despite weak construction figures, credit growth is accelerating at a rate that ANZ says will force the prudential regulator to intervene in the housing market later this year or early next year.
Annualized monthly credit growth has exceeded 10% and is expected to accelerate further, according to ANZ. By comparison, the wage price index rose only 1.7 percent in the year up to June 30.
“Housing finance commitments have almost doubled since May of last year, investor funding is increasing and credit growth far outstrips income growth,” said Felicity Emmett, senior economist at ANZ.
“With credit growth expected to accelerate in the coming months, we continue to expect APRA to announce tight macroprudential controls. “
Ms Emmett said affordability had deteriorated across all parameters and in all states, and ANZ forecast house price growth of more than 20% for the year, beating Westpac’s estimate of 18%. end of July.
Regulatory interventions in the market could target higher loan-to-value ratios, higher household debt-to-income ratios, or potentially the issuance of interest-only loans, similar to the ceilings last seen in 2017.
If the gains are driven by a more general increase in credit growth, the regulator could instead impose a limit on global lending for investors (as in 2015).