Australia GDP Growth Slows to 0.3% In Q1


The Australian economy expanded 0.3 percent in the March quarter of 2017, compared to a 1.1 percent growth in the December quarter 2016 while markets expected a 0.2 percent expansion. Positive contributions from final domestic demand and changes in inventories were unable to offset weak net trade and a drop in dwelling investment.

Australia now recorded 103 quarters between the June 1991 and the 2017 March quarter without two straight quarters of negative economic growth, which is regarded as the  longest stretch of any developed nation.

In the first quarter 2017, final consumption expenditure rose 0.6 percent. Household spending increased by 0.5 percent. This was driven by rises in rent and other dwelling services (0.5 percent), electricity, gas and other fuel (2.9 percent), operation of vehicles (1.3 percent) and insurance and other financial services (0.7 percent). Meanwhile, government final consumption expenditure increased 1.0 percent.

Gross fixed capital formation decreased by 0.6 percent. Public investment contracted 2.7 percent, driven by state and local public corporations (-22.5 percent) and commonwealth public corporations (-17.0 percent). Private investment was flat with total dwellings (-4.4 percent) offsetting the rise in total non-dwelling construction (4.4 percent). Total gross fixed capital formation detracted 0.1 percentage points from GDP growth.

Exports of goods and services fell 1.6 percent. Exports of goods declined by 2.6 percent, with non-rural exports down 4.1 percent, non-monetary gold down 10.2 percent and rural exports up 8.0 percent. Exports of services rose 2.5 percent. Imports of goods and services increased by 1.6 percent.  Imports of goods rose 1.8 percent, driven by a rise in consumption goods (3.4 percent). Imports of services were up 0.9 percent. 

The change in total inventories was an increase of AUD 2,069 million in seasonally adjusted terms following a rise of AUD 208 million in the prior quarter. This increase was driven by rises in mining, wholesale trade and retail trade inventories. A run down in manufacturing inventories of AUD 394 million partially offset the rise. It was the largest rise in mining inventories since March quarter 2012. The change in inventories added 0.4 percentage points to GDP growth.

By industry, electricity, gas, water and waste services rose the most by 3.2 percent and reaching the fastest increase for the division since the fourth quarter 2009, supported by electricity supply (3.1 percent) and water supply and waste services (3.4 percent). An increase was also seen in mining (0.5 percent, primarily driven by oil and gas extraction: 3.1 percent), coal mining: 1.6 percent, and other mining: 0.9 percent) and construction (1.1 percent, due to  rises in heavy and civil engineering, construction services and non-residential building construction. Also, wholesale trade went up 1.9 percent (due to rises across most subdivision), followed by transport, postal and warehousing (2.0 percent and marking the largest rise for the industry since March 2013, supported by road transport: 1.7 percent, rail transport: 2.6 percent and air and space transport: 1.3 percent) and professional, scientific and technical services (1.2 percent, which was the fifth straight quarter of growth). In contrast, agriculture, forestry and fishing fell 5.6 percent (mainly due to  falls in grains and other crops), followed by manufacturing (-1.0 percent, driven by  food, beverage and tobacco products: -3.5% percent and metal products: -2.4 percent).

Through the year to the first quarter, the economy grew by 1.7 percent, slower than a 2.4 percent expansion in the prior quarter but beating consensus of a 1.5 percent growth. It was the weakest annual expansion since the September quarter 2009.

Real net national disposable income increased by 1.2 percent quarter-on-quarter. The terms of trade increased by 6.6 percent from the prior quarter. Compared to the March quarter 2016, the terms of trade rose 24.8 percent.

ABS l Rida Husna | rida@tradingeconomics.com
6/7/2017 3:45:47 AM