MNI 5 THINGS. Australia GDP at 2.8% Y/Y, Below Forecasts

By Lachlan Colquhoun

     SYDNEY (MNI) - Australia's GDP rose at a slower pace than expected in the

third quarter, with the economy growing 0.3% q/q and 2.8% y/y. The compared to

growth of 0.9% q/q and 3.4% q/q in the second quarter, with both readings well

below analyst expectations. 

     Here are five factors from the data release by the Australian Bureau of

Statistics:

     -Growth below 3%. Economists had been expecting an annual GDP figure of

3.3% following a strong Q2, when the economy grew by 0.9% for an annualised rate

of 3.4%. That Q2 figure was also today revised down to 3.1%. The data went

against the economic scenario outlined by the Reserve Bank of Australia in its

latest interest rate decision, when it said it was anticipating growth of 3.5%

into 2019, potentially creating conditions for an interest rate rise. 

     -Lowest quarterly result since 2016. The 0.3% growth for the September

quarter was the slowest q/q growth since the economy contracted in Q3, 2016. The

economy has rebounded strongly since then with the highest quarter growth coming

in the Q1 this year, when it grew a full 1.0%. 

     -Household consumption weaker. Household final consumption increased 0.3%

for the quarter, contributing 0.2 percentage points to GDP growth. This compared

with a Q2 figure of 0.7%, when consumption added 0.4 percentage points to

growth.

     -Wages gain momentum. One positive in the data was a 1.0% increase in

employee wages, against 0.7% in Q2. The RBA is looking for higher wages to boost

consumer spending and lift inflation from the current 1.9% and into its target

range of 2 to 3%.

     Government expenditure strong. Government expenditure rose 0.5% in Q3, and

remains strong at an annualised 4.8%, in part due to higher Federal Government

spending on disability, age care and health services. 

[TOPICS: MALDS$,MAUDR$,MAUDS$,M$A$$$,M$L$$$,M$U$$$]