Australia’s economy expanded at the fastest annual pace in over a year last quarter thanks to a long-awaited jump in business investment, though marked weakness in household spending cast a cloud over the outlook for growth.
Wednesday’s data by the Australian Bureau of Statistics showed gross domestic product (GDP) grew by 0.6 percent inside third quarter, by the previous quarter when the idea rose 0.9 percent.
Growth for the year sprang ahead to 2.8 percent, by 1.9 percent, in part because a rare contraction suffered inside third quarter of last year dropped out of the calculation.
The result just missed market forecasts of growth of 0.7 percent for the quarter in addition to nudged the local dollar down a quarter of a cent to $0.7580.
The result would certainly be no surprise to the Reserve Bank of Australia (RBA) which only Tuesday kept interest rates steady at 1.5 percent in anticipation of faster growth in addition to a gradual revival in inflation.
Investors suspect policy will stay on hold for a long time to come in addition to interbank futures are not fully priced for a hike until early 2019.
The main driver of growth inside third quarter was engineering construction, using a tiny assist by a build up in inventories.
Otherwise, activity was meager with consumers especially strapped by slow wage growth in addition to mountains of debt. Household consumption rose just 0.2 percent inside quarter, the smallest increase since late 2012.
Some of which spending had to be funded by saving less, with the savings ratio down at a lowly 3.2 percent.
“The big surprise was consumer spending – looks horrible,” said Shane Oliver, chief economist at AMP Capital.
“The clear message by This specific will be which constrained consumer remains a big source of uncertainty for growth in Australia.”
The lack of demand meant inflation was also a no-show, using a key measure of domestic prices flat inside quarter.