ESRI Nowcast

Using the ESRI Nowcasting model currently employed to support the forecasting exercise in the Quarterly Economic Commentary, we will now update our forecast of modified domestic demand (MDD) on a monthly basis.

Our nowcast estimates that MDD is expected to grow by 4.1 per cent in Q3 2022 on an annual basis, indicating some moderation from its growth of 10.2 per cent per annum in Q2 2022. On a monthly basis, MDD is estimated to be 4.0 per cent above its level from August 2021. Strong tax receipts, continued strength in the labour market and growth in industrial production are all contributing to growth. However, continued uncertainty in the global economy and elevated inflation rates have contributed to a decline in survey indicators, such as business and consumer sentiment, as well as slowdowns in retail sales. While growth of 4.1 per cent is strong on a historical basis, it is clear that MDD is moderating considerably from its peak of 14 per cent in February 2022.