Australia GDP Growth at Over 2-Year Low in Q4

The Australian economy advanced a seasonally adjusted 0.2 percent in the December quarter of 2018, slowing from a 0.3 percent expansion in the previous period and missing market consensus of 0.3 percent. It was the weakest growth rate since the third quarter of 2016, mainly due to a contraction in dwelling investment and a modest expansion in private consumption.

Household spending increased 0.4 percent (vs 0.3 percent in Q3), driven by rises in health (1.9 percent), and clothing and footwear (2.2 percent), while there were falls in electricity, gas and other fuel (-2.4 percent), furnishings and household equipment (-0.8 percent), and purchase of vehicles (-1.5 percent). Meantime, government spending rose 1.8 percent (vs 1.2 percent in Q3), led by national non-defense (4.2 percent) and state and local government consumption (1.1 percent).

Gross fixed capital formation shrank 1 percent (vs 0.6 percent in Q3), due to private investment (-1.3 percent) as dwellings (-3.4 percent) and ownership transfer costs (-6.6 percent) dropped, while there were gains in intellectual property products (1.8 percent) and new engineering construction (1.0 percent). Meanwhile, public investment increased 0.3 percent, driven by state and local general government (6.3 percent).

Total inventories went up AUD 685 million following a decline of AUD 9 million in Q3. The rise was driven by a build up in public authorities inventories. 

Exports of goods and services fell by 0.7 percent (vs -0.1 percent in Q3). Sales of goods dropped 0.9 percent, with rural goods exports falling 5.6 percent while non-rural goods exports advanced 2.7 percent. Sales of services went up 1 percent. Imports of goods and services grew by 0.1 percent (vs -1 percent in Q3). Purchases of goods rose 0.3 percent, driven by intermediate (1.4 percent) and consumption goods (0.7 percent) partially offset by a fall in imports of capital goods (-0.3 percent). Imports of services decreased 0.4 percent.

By industry, a slowdown was seen in financial and insurance services (0.3 percent vs 0.8 percent in Q3); administrative and support services (0.1 percent vs 1.9 percent); and health care and social assistance industry (2.3 percent vs 2.8 percent). Also, output shrank in rental, hiring & real estate services (-0.6 percent vs 1.7 percent), of which rental and hiring services (-2 percent) and property operators and real estate services (-0.3 percent); and professional, scientific and technical services (-1.5 percent vs 1.2 percent), the first contraction in over three years, due to weakness in computer system design and related services (-2 percent) and other professional, scientific and technical services (-1.4 percent). In addition, agriculture, forestry and fishing contracted a further 3.2 percent, after shrinking 3.0 percent in the previous quarter, due to grains, livestock and other crops; and manufacturing output dropped 1.2 percent (vs -0.8 percent in Q3), namely food, beverage and tobacco products (-1.9 percent) and metal products (-1.8 percent). On the other hand, mining indutry grew 1.2 percent (vs -0.4 percent in Q3), driven by oil and gas extraction (7.7 percent), which recording its fourth consecutive increase as additional gas facilities commenced production. Additionally, output rebounded in information, media and telecommunications (2.5 percent vs -1.6 percent), led by telecommunications services (2.5 percent) and other information and media services (2.5 percent) and construction contracted less (-1.9 percent vs -2.7 percent).

Through the year to the fourth quarter, the economy expanded 2.3 percent, the weakest pace of expansion since Q2 2017, after a downwardly revised 2.7 percent growth in Q3 and below expectations of 2.5 percent.

Australia GDP Growth at Over 2-Year Low in Q4

ABS l Rida Husna |
3/6/2019 12:29:14 PM