Australia's growth rate slows in June qtr

5 Sep 2012, 12:10 pm   -   Source: AAP

Australia's economy grew by 0.6 per cent in the three months to June, slightly below expectations.

Australian June quarter economic growth has slowed from the frenetic pace earlier in the year.

Gross domestic product (GDP) rose by 0.6 per cent in the three months to June, for an annual rate of 3.7 per cent, the Australian Bureau of Statistics (ABS) said on Wednesday.

The March quarter growth rate was an upwardly revised 1.4 per cent.

Economists had been expecting GDP to rise by 0.8 per cent in the June quarter for an annual rate of 3.7 per cent, according to an AAP survey of 15 economists conducted on Friday.

Commonwealth Bank of Australia senior economist Michael Workman said economic growth was still reasonably firm.

"The annual rate was what people were expecting," he said.

"There was a strong lift in household spending in the second quarter, helped by those government payments that were compensation for the carbon tax.

"Also, there was pretty strong business investment."

Mr Workman said he expected economic growth to be slower in the second half of 2012 as commodity prices fall.

"The terms of trade numbers look like they are going to be a bit lower," he said.

"Generally, it looks like household income growth is going to be weaker in the second half of the year and jobs growth is, basically, flat."

Mr Workman said he still expected the central bank to cut the cash rate one more time 2012, most probably on Melbourne Cup day in November.

St George economist Janu Chan said weaker-than-expected household spending and the struggling household construction sector had weighed on growth.

While the data suggested economic growth remained strong, there was a risk it would continue to slow over the coming quarters, she said.

"We're still seeing those elements of caution among consumers and given the worries about the economy and the global backdrop," she said.

"So, while we are seeing above-trend growth now, we might see that soften in coming quarters."

HSBC chief economist Paul Bloxham said the national accounts hinted at a good report card for the Australian economy in the first half of the year.

"We had an upward revision for the March quarter," he said.

"So, if you put the two together, the economy was tracking at a pace of about four per cent, annualised, in the first half of the year, which is above trend.

"What we've got today is evidence that Australian economy was in very good shape in the first half of the year. The message is clear that growth was strong."

Mr Bloxham said he was unsurprised to see growth in mining investment outweigh weaknesses in the housing and manufacturing sectors.

Good numbers for household consumption went against the grain of recent reports, though, he said.

"If you take the year-end rate, it's running at four per cent, which is strong growth."

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