On the positive sideAccording to the ABS, the biggest contributor to the negative print for GDP was gross fixed capital formation (GFCF). The figure that was particularly outstanding was public sector GFCF. When this is examined, it appears to be an anomalous one-off correction, rather than a trend issue.
On the positive side, the GDP print told us that Gross National Income has improved.
We also know that the terms of trade are improving. We have not returned to our per-mining boom levels just yet (an index value of less than 70 on the current index).
The squeeze on profits may be coming to a turning point ...
On the negative sideThe pain appears to be coming from the mining states (particularly WA) after the construction phase of the mining boom.
New business investment continues it decline (post the construction phase of the mining boom). Gross fixed capital formation is a measure of net investment in fixed assets (disposals of such assets are netted off gross investments).
Domestic sales growth is flat year or year (before adjusting for inflation).
Total sales growth is similarly anemic.
The level of net saving has ceased its decline. While there was a reduction in the level of savings quarter on quarter this was adding to demand.
Looking to the labour marketIf we look more broadly, we can see there are signs of tension in the economy. For example, full time employment is down.
The participation rate has fallen sharply this year.
But we can also see signs of health. The unemployment rate continues to fall and the total hours worked is rising.