Australia Q3 GDP Growth Slows to 0.6%

The Australian economy advanced 0.6 percent in the September quarter of 2017, following an upwardly revised 0.9 percent growth in the previous quarter and slightly below market consensus of a 0.7 percent expansion. Positive contributions from non-dwelling construction and changes in inventories were unable to offset weaker domestic demand and foreign trade.

In the three months to September, non-dwelling construction added 0.9 percentage points to growth, exports added 0.4 percentage points, household consumption added 0.1 percentage points and government spending gave no contribution to growth. Meantime, changes in inventories added 0.2 percentage points to growth.

Final consumption expenditure rose 0.2 percent. Household spending increased by 0.1 percent, driven by rises in insurance and other financial services (1.3 percent); rent and other dwelling services (0.6 percent) and food (1.0 percent). Offsetting the rise was health (-1.0 percent), hotels cafes and restaurants (-0.9 percent), and recreation and culture (-0.6 percent).  Government final consumption expenditure rose by 0.2 percent. State and local government consumption grew 0.4 percent, while national government consumption contracted by 0.1 percent.

Gross fixed capital formation expanded by 1.8 percent. Public investment decreased 7.5 percent, driven by state and local general government (-15.4 percent). This was driven by the acquisition of the Royal Adelaide Hospital from the private sector last quarter. Private investment increased by 4.5 percent, due to non-dwelling construction (18.4 percent) and machinery and equipment (1.9 percent). Partially offsetting the rise was dwelling,  which fell 1.0 percent. 

Exports of goods and services grew by 1.9 percent. Exports of goods increased by 2.1 percent, with non-rural exports up 2.7 percent and rural exports up 3.4 percent. Exports of services rose 1.5 percent. Imports of goods and services also went up by 1.9 percent.  Imports of goods rose 1.8 percent, driven by a rise in capital goods (6.6 percent). Imports of services were up 2.2 percent. 

The changes in total inventories was an icrease of AUD 506 million in seasonally adjusted terms following a fall of AUD 273 million in the prior quarter. The increase was driven by a build up in manufacturing inventories, the second consecutive quarterly increase and the largest since September quarter 2010. Offsetting the increase was a decrease in mining inventories.

By industry, mining rose 1.1 percent, driven by iron ore mining (2.9 percent), other mining (2.8 percent). Manufacturing went up 1.5 percent, with mixed results across the five sub-categories. Electricity, gas, water and waste services increased by 1.9 percent, due to a rise in electricity supply (2.3 percent). Construction rose 0.6 percent, driven by a rise in heavy and civil engineering (3.9 percent). Retail trade rose 0.1 percent, driven by strength in food retailing. Also, professional, scientific and technical services rose 0.7 percent, marking the seventh straight quarter of growth. Meantime, financial and insurance services was flat. On the other hand agriculture, forestry and fishing fell 4.1 percent, the second consecutive quarterly fall for the industry. Also, information, media  and telecommunications declined by 1.3 percent, the largest fall since the March quarter 2010, driven by other information and media services (-1.7 percent), with flat to falling results across all subdivisions. Rental, hiring and real estate dropped by 1.6 percent, due to a fall in property operators and real estate services.

Through the year to the third quarter, the economy grew by 2.8 percent, much faster than a 1.9 percent expansion in the prior quarter while market estimated a 3.0 percent expansion. It was the strongest yearly figure since the June quarter 2016.

Australia Q3 GDP Growth Slows to 0.6%

ABS | Rida Husna |
12/6/2017 11:28:45 AM