Australia GDP Growth Accelerates to 0.8% in Q2


The Australian economy expanded 0.8 percent in the June quarter of 2017, much stronger than a 0.3 percent growth in the first quarter and matching market consensus. The solid expansion was mainly supported by strength in domestic demand and net exports.

In the three months to June, household consumption added 0.4 percentage points to growth, government spending contributed 0.2 percentage points to growth and exports added 0.6 percentage points to growth. On the other hand, non-residential construction subttracted 0.4 percentage points from growth and inventories detracted 0.6 percentage points from growth.

Final consumption expenditure rose 0.8 percent. Household spending increased by 0.7 percent, driven by rises in food (1.5 percent), insurance and other financial services (1.3 percent) and rent and other dwelling services (0.5 percent). Partially offsetting the rise was electricity, gas and other fuel (-3.7 percent) and purchases of vehicles (-1.1 percent). Meanwhile, government final consumption expenditure increased by 1.2 percent.

Gross fixed capital formation expanded by 1.5 percent. Public investment rose 11.9 percent, driven by state and local general government (25.5 percent). This included the acquisition of the recently completed Royal Adelaide Hospital from the private sector. Private investment declined by 1.1 percent, due to non-dwelling construction (-7.7 percent). Partially offsetting the fall was machinery and equipment (2.9 percent). Total gross fixed capital formation contributed 0.4 percentage points to GDP growth.

Exports of goods and services grew by 2.7 percent. Exports of goods increased by 3.1 percent, with non-rural exports up 3.5 percent and rural exports down 0.9 percent. Exports of services rose 2.4 percent. Imports of goods and services went up by 1.2 percent.  Imports of goods rose 1.4 percent, driven by a rise in capital goods (2.8 percent). Imports of services were up 0.5 percent. 

The changes in total inventories was a decrease of AUD 419 million in seasonally adjusted terms following a rise of AUD 1.982 million in the prior quarter. The fall was driven by  a rundown in wholesale trade inventories, the largest since June 2010, as grain wholesalers run down stock following the strong grain harvest this year. Offsetting the decrease was an increase in manufacturing inventories.

By industry, most sectors showed an increase. Agriculture, forestry and fishing rose 0.4 percent, driven by a rise in livestock. Mining rose 0.6 percent, driven by oil and gas extraction (8.2 percent). Manufacturing went up 1.8 percent, supported by rises in seven of the eight manufacturing sub-categories. This was the largest rise in manufacturing since Q2 2011. At the same time, construction rose 1.4 percent, driven by rises across the industry. Retail trade rose 1.6 percent, the largest increase since Q2 2012, driven by rises in other store based retailing and food retailing. Also, accommodation and food services grew by 2.1 percent, the fastest since Q2 2014, driven by food and beverage services. Also, professional, scientific and technical services rose 2.5 percent, marking the sixth straight month of growth. On the other hand, electricity, gas , water and waste services fell 1.4 percent, mainly due to a fall in electricity supply (2.8 percent, which was the sharpest drop since Q1 2003). Also, wholesale trade decreased 1.9 percent, driven by falls in basic material wholesaling, machinery and equipment wholesaling and other goods wholesaling. Transport, postal and warehousing contracted 1.5 percent, mainly due to road transport (-0.8 percent) and rail transport.

Through the year to the second quarter, the economy grew by 1.8 percent, following a 1.7 percent expansion in the prior quarter and in line with estimates. 



ABS l Rida Husna | rida@tradingeconomics.com
9/6/2017 5:45:59 AM