Recent economic growth data for the third quarter has disappointed Australia. Gross Domestic Product (GDP) slipped 0.5 per cent in the September quarter from what we saw in the June quarter, as Australia reported for a negative growth for the first time in five years since the Queensland flood affected March quarter 2011. Soon after the release of the data, the Australian dollar plummeted.
.png)
GDP Trend (Source: Australian Bureau of Statistics)
The contraction that was seen in the quarterly result pulled down the yearly growth figure. There was only a 1.8 per cent rise in the annual rate and the same was below the 3.3 per cent growth seen in the previous quarter. The rise also was well below the market consensus. The data was not even close to the projections for a rolling annual growth figure of 2.2 per cent. The largest contributor to the fall in GDP growth on an industry basis was the construction industry which plummeted 3.6 per cent for the quarter. Even, financial and insurance services, professional scientific and technical services, rental hiring and real estate services and administrative support services, reported for below trend growth. Public capital expenditure reduced 0.5 percentage points from growth while private investment in new buildings detracted 0.3 percentage points from GDP growth. On the other hand, agriculture surged 7.5 per cent while mining production maintained its historically high levels of production.
However, the rally in commodity prices seems to bring in some balance and GDP might be on track in the fourth quarter. At the same time, the trade deficit widening in October 2016 signalled for diminishing hopes on a better economic scenario. The imports exceeded exports by $1.54 billion in October. Thus, it would be too early to jump on conclusions and predict the scenario given the current environment that Australia is witnessing.
Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd currently hold positions in: BHP, BKY, KCN, PDN, and RIO. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendation