Australian Economy Growth Streak Unbroken at 25 Years

Data released by the Australian Bureau of Statistics (ABS) shows that Gross Domestic Product (GDP) grew 0.5 per cent in seasonally adjusted terms in the June quarter 2016, down on the growth of 1.0 per cent the economy experienced in the March quarter.

“Second quarter public demand volumes surged much more than even we expected, up 4.5 per cent, one of the largest rises on record as consumption lifted, and investment boomed”, they said.

Meanwhile, the benchmark Australia’s S&P/ASX 200 index traded 0.13 percent higher to 5,406.5 by 04:40 GMT.

“If we didn’t have a low inflation problem in Australia then these figures would argue against a rate cut”, said Shane Oliver, chief economist at AMP Capital Investors.

Economic growth over the past six months and the past year has been well above the 2.75 per cent that the Treasury describes as Australia’s long-term speed limit, meaning the pace should ease from here on, but there are few signs of it.

“In other words, things would be weaker if it wasn’t for this secret fiscal stimulus.”

The benchmark ended 0.3 per cent lower on Tuesday.

The Australian dollar dropped low against its U.S. counterpart on Wednesday, weighed by the release of disappointing economic growth data from Australia and the fall of real unit labor costs indicating a lack of wage pressures.

Standing in Australia’s way for the world record is the Netherlands’ 26-year run of expansion – but just three more quarters of growth Down Under would steal the title away from the Dutch.

“Generally the story was not too far from expectations but there is a little bit of soft undertone to household consumption”.

“Domestic demand until today’s numbers were looking quite reasonable”.

Australia’s transition is relying on industries like tourism and education, which are sensitive to the currency’s fluctuations. “But we still expect an interest rate cut – the inflation measures are still very low in the national accounts”. The Aussie is up more than 10 per cent since mid-January.

Mr Morrison said the result was a tribute to every Australian who has gone out there and got a job, that is running or has started a small business.

“Total investment was flat in the quarter, with the continued reduction in engineering construction associated with the mining sector offset by growth in public investment”, it said. “Labour market indicators continue to be somewhat mixed, but suggest continued expansion in employment in the near term”.