• GDP rose by 0.2% q/q (1.0% y/y) marginally weaker than we expected (and in line with consensus). Consumption was weaker than expected, while the other components were largely in line with the partials – business and dwelling investment made no contribution while net exports and public demand were key supports.

• Overall, today’s data show that economic growth remains very weak, and a larger adjustment in per capita terms (now having fallen for 6 quarters) continues to be masked by strong population growth. It also shows that the public sector has been an important support with private sector components very weak.

• The broader set of price pressures continues to gradually ease though progress has been much more gradual over H1 2024 – painting a similar picture to the key CPI measures. That said, the weak productivity backdrop sees unit labour costs growth remain elevated.

• Productivity fell in the quarter, leaving the recent trend very soft. Productivity has been weighed by weak mining output and strong public sector employment growth.

• We continue to assess that soft growth through H1 will be the trough in growth and look for improving but still below trend growth in H2 – contingent on the response to tax cuts and ongoing easing in inflation for household consumption. Overall, we continue to see growth of around 1% this year (RBA: 1.7%).

• For the RBA, growth is likely to be weaker this year than they expected at the time of the August SMP. The output gap is continuing to close but the RBA will need to see evidence that is translating into further easing in inflation pressures. NAB continues to expect the conditions for a cut will not be in place this year. We expect the first cut in May, though acknowledge the risk skews to an earlier cut.

Read the full report here: NAB Economic Commentary Australian GDP Q2 2024