Australia’s economy appears to be slowing much more rapidly than expected, after a spurt of growth in the first half of the year.
Gross Domestic Product (GDP) grew by 0.3 per cent in the three months to September, or 2.8 per cent over the year.
That is a significant step down from the 3.4 per cent growth recorded in the second quarter National Accounts from the Bureau of Statistics.
The result is well below the analyst consensus of 3.3 per cent and reflects weaker than expected construction and capital expenditure data, as well as a general softening in the housing sector.
Despite a strong contribution from net exports and goverment spending, it appears the domestic economy has softened markedly.
The construction sector was a drag on growth while the retail and manufacturing sectors were flat.
It is the weakest economic expansion in two years.
It is not the result the Reserve Bank would be looking for in its quest to raise interest rates.
IFM economist Alex Joiner said there’s not much good news from households, with spending growth at a soft 0.3 per cent over the quarter and 2.5 per cent over the year.
The household savings rate, as a share of household income, has slipped to just 2.4 per cent.
The savings rate is at its lowest level since 2007, before the global financial crisis, and indicates consumers are digging into their savings to pay for essentials.
“Household income per capita was slightly negative in the quarter and just up 1.2 per cent over the year — hard to see them hit with a rate hike any time soon,” Dr Joiner said.
