Australia Q4 GDP Growth Below Estimates



The Australian economy advanced 0.4 percent in the December quarter of 2017, less than market consensus of a 0.6 percent expansion and after an upwardly revised 0.7 percent growth in the previous quarter. It was the weakest growth rate since a contraction in the September quarter 2016, as positive contributions mainly came from final consumption expenditure while non-dwelling construction and net trade had a downward effect.

In the three months to December, the positive contributions were made by household consumption (0.6 percentage points), government spending (0.3 pp), public investment (0.2 pp) and private investment in machinery and equipment (0.1pp). Meantime, the growth was lowered by: investment in non-dwelling construction (-0.5 pp), investment in dwellings (-0.1 pp) and net trade (-0.5 pp). 

Final consumption expenditure rose 1.1 percent. Household spending increased by 1 percent, driven by rises in health (3.4 percent); hotels, cafes and restaurants (2.9 percent) and recreation and culture (2.0 percent). Offsetting the rise was drop in electricity, gas and other fuels (-3.1 percent) and food (-0.7 percent). Government spending rose by 1.7 percent with state and local government growing by 0.7 percent and national government by 3.1 percent.

Gross fixed capital formation contracted by 1.2 percent as private investment was down 2.2 percent, due to non-dwelling construction (-8.0 percent) and to a lesser extent dwellings (-1.3 percent). In contrast, public investment increased by 2.9 percent, driven by state and local general government (1.9 percent) as assets were transfered from the private sector. Also, investment in machinery and equipment rose 3.3 percent.

Total inventories increased AUD 14 million following a fall of AUD 93 million in the prior quarter. The increase was driven by a build up in mining inventories, the second quarterly increase in the last six quarters. Offsetting the increase was a decrease in farm and retail trade inventories.

Exports of goods and services fell by 1.8 percent. Exports of goods dropped by 1.7 percent, with rural exports down 9.7 percent and non-rural exports down 0.3 percent. Exports of services also fell by 1.9 percent. Imports of goods and services went up by 0.5 percent. Imports of goods rose 1.6 percent, driven by a rise in consumption goods (4.7 percent) and intermediate goods (4.4 percent). Imports of services were down 2.7 percent. 

By industry, mining rose 1.3 percent, driven by iron ore mining (5.5 percent) and coal mining (0.7 percent) while oil and gas extraction was down (-1.8 percent). Construction expanded by 0.3 percent, due to a rise in building construction (0.9 percent). Also, information, media and telecommunications increased by 2.9 percent, driven by telecommunications services (3.5 percent) and other information and media services (2.2 percent). Financial and insurance services grew by 0.1 percent, the least since Q2 2014, as finance reported no growth and financial and insurance services were up 0.2 percent. At the same time, healthcare and social assistance advanced 1.9 percent, driven by rises in both private and public health. On the other hand, agriculture, forestry and fishing fell by 2.7 percent, the third consecutive quarterly fall. Also, manufacturing declined by 1 percent, with mixed results across the five sub-categories. Electricity, gas, water and waste services decreased by 0.8 percent, due to a fall in water supply and waste services (-1.5 percent), electricity supply (-0.2 percent) and gas supply (-1.1 percent).

Through the year to the fourth quarter, the economy grew by 2.4 percent, slower than an upwardly revised 2.9 percent expansion in the prior quarter and slightly below expectations of a 2.5 percent growth. 


Australia Q4 GDP Growth Below Estimates


ABS l Rida Husna | rida@tradingeconomics.com
3/7/2018 1:22:12 PM