Australia’s economy expanded in 2012 at the fastest pace in five years as resource investment and exports outweighed subdued manufacturing and construction.
Gross domestic product grew 3.6 percent last year, the best performance since a 4.7 percent expansion in 2007, data from the Australian Bureau of Statistics compiled by Bloomberg showed. The economy grew 0.6 percent in the fourth quarter from the previous three months, when it rose a revised 0.7 percent that was higher than initially reported, today’s report showed.
Stocks and the currency rose as stronger exports validated Reserve Bank of Australia Governor Glenn Stevens’s decision to leave interest rates unchanged yesterday as the nation extends 21 recession-free years. Policy makers cut rates by 1.75 percentage points in the 14 months through December to rebalance an economy where mining regions in the north and west thrive while builders and manufacturers in the south and east struggle, dragged by the strength of the nation’s currency.
“The broad picture is one of an economy in better shape than many commentators give credit,” said Michael Blythe, chief economist in Sydney at Commonwealth Bank of Australia (CBA), the nation’s biggest lender. “Despite all the economic dramas and general pessimism, the growth outcome actually beat the consensus forecast.”
The nation’s benchmark S&P/ASX 200 Index climbed 1 percent today and the local dollar traded at $1.0293 at 2:10 p.m. in Sydney from $1.0264 before the release, extending its longest stretch above parity with the U.S. dollar. The three-year government bond yield held gains, rising 8 basis points to 2.85 percent.
Exports increased 3.3 percent in the fourth quarter, adding 0.7 percentage point to GDP growth, today’s report showed. Household spending advanced 0.2 percent last quarter, adding 0.1 point to the expansion, it showed. Public spending soared 24.6 percent, adding 1.1 points, reflecting the transfer of an unidentified asset from private industry to state government.
The result wasn’t as good as it appears because the purchase of the second-hand asset that boosted public consumption is “not actually adding to new economic growth, it’s just a transfer,” said Joshua Williamson, a senior economist at Citigroup Inc. in Sydney.
“The headline GDP met expectations, but the details of the report showed little of the rebalancing the RBA wants towards domestic demand that remains below trend,” he said. “The increase in government consumption is basically equal to the decrease in dollar terms of private non-dwelling construction.”
Non-dwelling construction slumped 8.9 percent, subtracting 0.8 percentage point from GDP growth. Machinery and equipment fell 3.3 percent, subtracting 0.2 point, the data showed.
The nation’s household savings ratio declined to 10.1 percent in the three months through December from 10.3 percent in the third quarter, today’s report showed.
The RBA cut its benchmark rate to 3 percent in December, matching the half-century low set during the 2009 global recession as the labor market softens and an elevated currency hurts industries such as manufacturing and tourism. It predicts the nation’s mining investment boom will peak this year.
Reflecting the strength of the resource industry, final demand in the mining hub of Western Australia grew 14.2 percent in the fourth quarter from a year earlier, and the Northern Territory soared 32.8 percent, today’s report showed. In contrast, the manufacturing center of Victoria shrank 0.1 percent and the island state of Tasmania contracted 4.6 percent.
Productivity, which the central bank and Treasury say needs to lift to maintain rising living standards, grew 1 percent in the market sector in the fourth quarter from the prior three months, when it advanced 0.4 percent, the report showed.
The nation’s terms of trade -- a measure of windfall gains from exports that reached a record high in 2011 -- declined 2.7 percent in the final quarter of 2012 from the prior three months, and were 12.9 percent lower than a year earlier.
Traders are pricing in a 24 percent chance the RBA will lower rates next month, swaps data compiled by Bloomberg show.
In the past month, the government reported that unemployment held at 5.4 percent in January as employers added part-time jobs, while a private survey showed consumer confidence surged last month by the most since September 2011.
Australia’s 3.6 percent growth last year led Norway’s 3.2 percent, the strongest expansions among major advanced economies, according to data compiled by Bloomberg.
In the euro area, data today may confirm an initial report that GDP contracted 0.6 percent in the fourth quarter from the previous three months, according to the median estimate of economists surveyed by Bloomberg News. The U.S. will give mortgage-application numbers and the Bank of Canada is forecast to leave its benchmark rate unchanged at 1 percent.
“Australia has managed to achieve solid growth in the December quarter at a time when around half of all advanced economies contracted, including five major advanced economies,” Treasurer Wayne Swan said in a statement after today’s release. “Australia’s around-trend growth rate over the year is more than four times the OECD average.”
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