Australia GDP Gains 0.8% On Quarter In Q2

Australia GDP Gains 0.8% On Quarter In Q2”

The primary income deficit widened $499 million.

Economists had expected a current account deficit of A$7.5 billion in the quarter.

Net exports of GDP came in at 0.3, topping expectations for a flat reading following the 0.7 decline in the three months prior.

A separate batch of data from the ABS also had positive news for GDP, with public investment from governments jumping nearly 12 per cent over the quarter.

A big part of the rise was in the volatile defence sector, although state governments maintained the recent stronger trend in spending as well.

Iron ore prices fell 16 per cent over the quarter, while volumes edged up just 2 per cent.

The value of coal exports fell 15 per cent thanks to both weaker prices and the aftermath of Cyclone Debbie dragging down volumes.

In real terms, export volumes rose 2.7 per cent, boosted by higher volumes for iron ore and LNG and other non-rural goods, while import volumes were up by 1.4 per cent.

On wages, yesterday's Business Indicators release showed that the wages bill rose a solid 1.2 percent in Q2, but this largely reflects the strength in employment in the quarter.

The Reserve Bank of Australia (RBA) has been predicting an acceleration in growth towards 3 per cent over the next couple of years, as a long slump in mining investment eases and high prices for key commodity exports percolate through the economy.

That deterioration reflected a number of known culprits, said RBC Capital Markets chief economist Su-Lin Ong.

Domestic spending increased 1.0 percent for the quarter, driven by a 0.7 percent growth in household consumption, with expenditure on food, clothing and household furnishings increasing.

"Secondly, while the quarterly data are choppy, the firmer growth momentum in the quarter is consistent with stronger labour market data and business conditions". Of more interest will be the wage rate in tomorrow's report, which is expected to show only modest growth.

Australia's net foreign debt liability decreased $21.2 billion (2 per cent) to a net liability position of $990.6 billion.

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