The Australian economy unexpectedly shrank 0.5% in the third quarter of 2016, compared to an upwardly revised 0.6% growth in the June quarter. It was the first contraction since the March quarter 2011 and the fastest fall since the December quarter 2008, dragged down by investment and net trade. Through the year, the economy grew by 1.8%, slowing sharply from a 3.3% expansion in the June quarter. It was the weakest growth yoy since the first quarter 2013.
Gross fixed capital formation dropped by 2.7%, subtracting 0.7 percentage points from growth. Private investment fell 0.8% and public investment decreased 10.4%.
Exports of goods and services went up 0.3% while imports of goods and services grew at a faster 1.3%. Net exports detracted 0.2 percentage points from GDP growth. The change in total inventories was an increase of AUD 1,053 million in seasonally adjusted terms compared to a rise of AUD 435 million in the last quarter, contributing 0.1 percentage points to GDP.
In the September quarter, final consumption expenditure grew by 0.3%. Household spending rose 0.4% and government expenditure shrank 0.2%.
The Reserve Bank of Australia conceded growth would slow when it held rates this week, but also predicted an eventual pick up. The RBA's own index of commodity prices jumped 10% in November alone, and when measured by spot prices was 61% higher on the same month last year. That should boost export earnings and company profits and help cushion the tax take from record-low growth in wages. Consumer demand is also showing signs of life, with retail sales boasting a third month of solid growth in October, while tourism is booming.
In the opinion of our economists today’s weak GDP reading is a one-off. We think that factors which dragged down growth were reversed in the current quarter. We believe t that the RBA monetary easing cycle is over and remain constructive on the AUD/USD in the long term.
GrowthAces.com - Daily Forex Trading Strategies
Gross fixed capital formation dropped by 2.7%, subtracting 0.7 percentage points from growth. Private investment fell 0.8% and public investment decreased 10.4%.
Exports of goods and services went up 0.3% while imports of goods and services grew at a faster 1.3%. Net exports detracted 0.2 percentage points from GDP growth. The change in total inventories was an increase of AUD 1,053 million in seasonally adjusted terms compared to a rise of AUD 435 million in the last quarter, contributing 0.1 percentage points to GDP.
In the September quarter, final consumption expenditure grew by 0.3%. Household spending rose 0.4% and government expenditure shrank 0.2%.
The Reserve Bank of Australia conceded growth would slow when it held rates this week, but also predicted an eventual pick up. The RBA's own index of commodity prices jumped 10% in November alone, and when measured by spot prices was 61% higher on the same month last year. That should boost export earnings and company profits and help cushion the tax take from record-low growth in wages. Consumer demand is also showing signs of life, with retail sales boasting a third month of solid growth in October, while tourism is booming.
In the opinion of our economists today’s weak GDP reading is a one-off. We think that factors which dragged down growth were reversed in the current quarter. We believe t that the RBA monetary easing cycle is over and remain constructive on the AUD/USD in the long term.
GrowthAces.com - Daily Forex Trading Strategies
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.