Q2 Construction figures are due at 0130 GMT:
- expected 2.5% q/q, prior 2.4%
As posted earlier:
- data will be an input into the economic growth numbers (GDP for Q2 is due on September 1). Construction has been a big beneficiary of the fiscal (and monetary) support outlaid in response to the pandemic and the associated restrictions imposed. Housing, public works (infrastructure) leading the way.
Says NAB, accurately:
- Q2 data clearly precedes the most recent virus developments and will be accordingly be seen as very dated and unlikely to be market moving
- A miss to construction (or Capex tomorrow) could raise the risks of a negative Q2 GDP print with NAB pencilling a meagre Q2 GDP print of just 0.2% q/q
Q3 GDP will certainly be a negative given the persistent lockdowns in Australia’s two largest cities, and if NAB’s warning of the potential for a negative Q2 comes to be then Australia will have been in a recession. The commonly accepted definition of a recession is two consecutive quarters of negative GDP. Plenty of folks do not like this definition, but as I say, its the commonly accepted definition.
On the other hand (and this is where the “but…” in the headline to the post comes in) if Q2 shows healthy growth (again, September 1 the data is due) then it’ll be a positive as it’ll show the economy in good shape going into a negative Q3, for what that’s worth at least.