Gross domestic product climbed 0.9 percent from the third quarter, when it gained a revised 0.3 percent, the Bureau of Statistics said in Sydney. The economy grew 2.7 percent from a year earlier, the report showed.
Governor Glenn Stevens, the first Group of 20 central banker to increase interest rates this year, says Australia’s economy is running at or near trend” after skirting last year’s global recession. Growth may strengthen this year as China’s demand for resources stokes investment by companies including BHP Billiton Ltd. and Chevron Corp.
Machinery and equipment spending surged 10.9 percent in the quarter from the previous three months, adding 0.8 percentage points to GDP, report said. Household spending rose 0.7 percent and government spending jumped 1.8 percent.
Signs that Australia’s economy outperformed other nations made its dollar the best performer among the most-traded currencies in the past year. The currency has climbed 42 percent versus its U.S. counterpart since March 2009 and this week hit a 25-year high against Britain’s pound.
Faster-than-anticipated growth was a key reason policy makers increased the overnight cash rate target to 4 percent yesterday from 3.75 percent and prompted Governor Stevens to say rates should be closer to average,” which he last week signaled may be 75 basis points higher than they are now.
Australia’s expansion is being boosted by spending by Prime Minister Kevin Rudd’s government, which is outlaying A$22 billion ($20 billion) on roads, railways, ports and schools. Business investment is also surging as resources companies expand capacity to meet Asia’s rising demand for iron ore, coal and energy.
Employers added 194,600 jobs in the five months through January, the most in more than three years, cutting the unemployment rate to an 11-month low of 5.3 percent, almost half the level in Europe and U.S. economies.