It’s not quite a boom but the Australian economy is in robust shape, according to new data released today.
Australia’s economy grew by 0.8 per cent in the December quarter, well ahead of expectations, figures from the Australian Bureau of Statistics showed.
Gross domestic product, which measures the output of the economy, rose 2.8 per cent through 2013, and grew 0.8 per cent in the December quarter, which was above economists’ expectations.
Investors bet that the strong number would keep the Reserve Bank of Australia from cutting rates further, which pushed the Australian dollar up by more than a third of a US cent after the release of the data.
Shortly after the release, the Aussie was worth 89.92 US cents, up from 89.56 US cents just before the data was released.
Mining still strong
It was increased mining exports which helped lift the pace of economic growth in the final three months of 2013, but other sectors of the economy were still weighing on growth.
The figures were slightly better than economists and the Reserve Bank of Australia had expected, but the domestic economy is still soft, National Australia Bank senior economist David de Garis said.
“The growth is supported by the ramp up in exports,” he said. “The domestic economy is still quite soft and domestic final demand only grew by 1.2 per cent over the course of last year.”
He said the data was unlikely to alter the central banks’ neutral stance.
“They’ll still be looking for domestic final demand really to show a bit more grip. They are already seeing that in the housing sector in yesterday’s building approvals but beyond that, it’s patchy.”
Twelve economists surveyed by AAP last week said gross domestic product (GDP) was expected to rise by 0.7 per cent in the quarter and 2.5 per cent in the year to December.
Ahead of expectations
GDP was expected to rise by 0.7 per cent in the December quarter for an annual rate of 2.5 per cent, according to an AAP survey of 12 economists.
The December quarter growth follows a 0.6 per cent rise in GDP for the September quarter.
Household spending rose 0.8 per cent in the December quarter and was up 2.6 per cent over the year to December, seasonally adjusted.
Total investment in housing rose 1.0 per cent in the quarter to be up 1.4 per cent in the year to December.
Total gross fixed capital formation, investment by households, businesses and government, fell 1.2 per cent in the quarter and was down 2.4 per cent over the year.
Domestic final demand, a measure of total spending in the economy, rose 0.1 per cent in the quarter and was up 1.2 per cent over the year.
A key measure of inflation, the implicit price deflator for household final consumption, was up 0.8 per cent in the December quarter, from a rise of 0.9 per cent in the previous quarter, and was up 2.7 per cent over the year.
Farm GDP, in chain volume measures, rose 0.8 per cent in the December quarter to be up 12.2 per cent in the 12 months to December.