Australia’s economy slowed last quarter on tighter government spending and the weakest consumer demand in 2 1/2 years, validating the central bank’s decision to cut interest rates.
Third-quarter gross domestic product advanced 3.1 percent from a year earlier after a revised 3.8 percent expansion in the April-June period, a Bureau of Statistics report released in Sydney today showed. That matched the median of 25 estimates in a Bloomberg News survey. Growth was 0.5 percent from the previous three months, when the quarterly gain was 0.6 percent.
The report covers a period when companies including BHP Billiton Ltd. scaled back mining projects in response to lower commodity prices. Reserve Bank of Australia Governor Glenn Stevens lowered rates four times this year to help support consumption and the nation’s housing market as an elevated currency extended a slump in manufacturing and services, and the government sought spending cuts to eliminate a budget deficit.
“Investment outside of mining still hasn’t shown any signs of life yet,” said Kieran Davies, chief economist at Barclays Capital in Sydney who predicted today’s quarterly increase. “The RBA will still just be more focused on making sure the rest of the economy picks up.”
He said the central bank would be relieved that the report showed easing wage pressure and improved productivity after faster-than-expected inflation last quarter.
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