GDP: Australia's economic growth improves but disappoints the optimists

GDP: Australia's economic growth improves but disappoints the optimists

That was slightly lower than market expectations for quarterly growth of 0.7 per cent and 3.0 per cent over the year to September.

Australia's economy expanded 0.6 per cent in the September quarter and grew 2.8 per cent over the 12 months to September, official figures show.

The Australian dollar dropped sharply on the result, from 76.13 USA cents before the 11.30am release to 75.84 United States cents two minutes later.

The figures highlighted the two-track nature of Australia's recent economic growth. But household consumption grew by just 0.1% in the quarter and is tracking weak growth levels not seen in nearly a decade.

Economists said they did not expect a near-term rise in interest rates until a pick-up in wages and inflation, which at 1.8 percent is below the Reserve Bank's target band of 2.0-3.0 percent.

"This is above the OECD (Organisation for Economic Co-operation and Development) average and puts Australia back up towards the top of the pack for major advanced economies around the world".

The ABS observed that 17 out of 20 industry sectors recorded growth this quarter, with professional, scientific and technical services leading the way, along with health care and social assistance, and manufacturing.

Households, however, delivered only a small amount of growth in a sign of the struggles some families are having on the back of low wages growth.

However, it wasn't all good news for overall growth, with increased activity in business investment and public infrastructure offsetting a measly 0.1 per cent increase in household consumption.

"New public investment was up 12.6 per cent over the year, with defence investment up 31 per cent over the year", he told reporters at a press briefing. This was followed by electricity, gas, water and waste services, which grew by 1.9 per cent.

Monthly retail sales released Tuesday showed a return to stronger consumption at the start of the fourth quarter after a dismal winter of spending Down Under, but economists pointed out that the gains were largely a statistical rebound. That view looks too optimistic, Mr. Evans said.

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