Business investment boosts Australia's economy

Copper led a rout in miners

Copper led a rout in miners

The national accounts for the September quarter showed the Australian economy grew by a less-than-expected 0.6 per cent in the three months to the end of September.

The quarterly expansion took the annual rate of growth to a healthy 2.8 percent, slightly below expectations but broadly in line with the central bank's forecasts, the Australian Bureau of Statistics (ABS) figures showed. This led the sector to be the only one to have contracted over the past year, down by 0.7 per cent since the September quarter of 2016.

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He noted household consumption was "soft", but October saw some improved retail figures.

The Australian dollar has dropped sharply on the result, from 76.13 United States cents ahead of the 1130 AEDT release to 75.84 USA cents at 1132 AEDT.

"This is above the OECD (Organisation for Economic Co-operation and Development) average and puts Australia back up towards the top of the pack for major advanced economies around the world".

Private investment's contribution to growth tripled in the quarter, while public investment was up 12.6 per cent over the year.

"The RBA is clearly increasingly confident with the trajectory of the economy in terms of activity and the labour market, but inflation remains too low", ANZ senior economist Felicity Emmett said.

Treasurer Scott Morrison welcomed the acceleration in on-year growth, focusing on the jump in company spending.

"This is predominantly driven by the increase in employment and, in particular, full-time employment", Mr Morrison said.

The ABS observed that 17 out of 20 industry sectors recorded growth this quarter, with professional, scientific and technical services leading the way, along with health care and social assistance, and manufacturing. It was the best performance for WA since the June quarter of 2014.

The main driver of economic growth had been public and private investment.

"The big concern is whether households, the engine of the economy, accept that expectations of a lift in wages growth are unjustified and it becomes necessary to adjust spending to a lower income outlook", he said.

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