RTTNews - The Australian economy grew at a faster than expected pace in the second quarter, the Australian Bureau of Statistics announced Wednesday, reflecting the recent optimistic outlook for the country's economy. The quarterly GDP report comes close on the heels of RBA's announcement Tuesday to leave interest rate unchanged at 3%, with the central bank citing stronger than expected economic conditions.
The GDP rose a seasonally adjusted 0.6% on quarter in the second quarter, compared to the 0.4% growth reported in the first quarter. Economists had expected a more modest 0.2% growth. On a yearly basis, GDP was up 0.6% in the second quarter, exceeding analysts' expectation of a 0.3% increase.
On the production side, the quarterly rise in GDP was mainly driven by property & business services, which contributed 0.4 percentage points in the second quarter. Other notable contributions came from manufacturing, wholesale trade, retail trade, government administration & defense, culture & recreational services and ownership of dwellings, with all contributing 0.1 percentage points to growth. The biggest negative contribution came from agriculture, forestry & fishing, with the sector deducting 0.4 percentage points from growth.
In expenditure terms, the government final consumption expenditure and household final consumption expenditure both increased 0.8% in the second quarter. The gross fixed capital formation was up 0.8%, mainly due to a rise in private business investment, which grew 1.9%.
Exports of goods & services increased 1% in the second quarter. Exports of goods was up 0.6%, with rural & non-rural exports rising 1.2% and 4%, respectively. On the other hand, imports of goods & services grew 2.1%, with imports of services rising 9.6% and imports of goods edging up 0.2%. The rise in imports of services was driven by travel services, which soared 15.7% and other services, up 12.3%.
Also, total inventories fell by A$2.63 billion in the second quarter compared to the A$3.10 billion in the previous quarter. The change in inventories contributed 0.2 percentage points to quarterly growth.
On the expenditure side, the most significant contribution for the quarterly growth came from household final consumption expenditure, with 0.5 percentage points. It was followed by machinery & equipment investment, with 0.4 percentage points, and exports of goods & services, which contributed 0.2 percentage points to growth. The quarterly growth was partly offset by imports of goods & services, which deducted 0.5 percentage points.
The Bureau also announced that non-farm GDP increased 1.1% on quarter. The terms of trade fell 7.4% in the second quarter, with export prices falling faster than import prices. Further, the real net disposable income decreased 3.2% compared to the previous quarter.
The Australian dollar, which trended lower against its major counterparts on the back of weak equities in the early part of Wednesday's Asian session, recouped some of its losses shortly after the release of the Bureau's GDP report. The Aussie thus rose from a fresh multi-month low against the Japanese yen, and multi-day lows against the U.S. and Canadian dollars.
Meanwhile, in a separate report released Tuesday, the Bureau announced that Australia's second quarter current account deficit almost doubled compared with the previous quarter, largely as a result of a drastic fall in exports. A sluggish global economic outlook was blamed for the widening of the deficit.
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