Private investment helps Australia's economy grow by 2.8%


Australia's economy has expanded at a slower than expected rate in the three months to September, with the weakest consumer spending in almost 10 years dragging on growth.

Australia's gross domestic product expanded a seasonally adjusted 0.6 percent on quarter in the third quarter of 2017, the Australian Bureau of Statistics said on Wednesday.

Economists had forecast growth of 0.7% over the quarter and 3.0% over the year, and had indicated that the yearly figure would offer a somewhat flattering picture of the economy helped by a low base of comparison last year.

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"Consumers are indeed feeling the strain", Mr Bowen said.

Treasurer Scott Morrison said public investment was strong on an annual basis.

The previous quarter's reading of 0.8% was also revised up to 0.9%, extending the Australian economy's uninterrupted growth to 26 years without a recession.

Indeed, household consumption rose just 0.1 percent in the quarter, the smallest increase since late 2012.

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The household savings ratio also ticked up 0.2 per cent to 3.2 per cent, suggesting that households have been reluctant to run down savings to fund consumption.

However, household consumption was "soft" even though October's retail sales figures, released on Tuesday, showed some improvement.

But a cloud still hangs over the Australian consumer, with record household debt, years of record-low wages growth, and, more recently, softening house prices. Hence, we still see the RBA on hold until November 2018, but with the risk of a later move.

Weak wages growth weighed on household budgets again, despite the declining unemployment rate. "We believe it will", said Paul Dales, chief economist at Capital Economics.

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"While total compensation of employees was solid at 1.2% quarter-on-quarter and 3% over the year, this is nearly entirely due to strength in employment rather than wages", he said.

For private investment, the contribution to our growth more than tripled in the September quarter.

"Business conditions, as surveyed, are at their highest level in 20 years. our enterprise tax plan is a key part of this, which is why it must be supported".

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