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Australian GDP grows 1.1% in Q1, net exports positive

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Staff writer ▼ | June 2, 2016
Australian GDP expanded 1.1% in the March quarter of 2016, accelerating from an upwardly revised 0.7% growth in the previous quarter.
Australian GDP
Australia   Final consumption expenditure grew by 0.7 percent
Positive contributions from net exports and final consumption expenditure offset a decline in investment.

In the first quarter of 2016, final consumption expenditure grew by 0.7 percent, adding 0.5 percentage points to GDP growth. Household spending rose 0.7 percent while government expenditure increased by 0.9 percent. In contrast, gross fixed capital formation declined by 1.7 percent, substracting 0.4 percentage points to growth.

Private investment fell 4.2 percent, mainly due to a decrease in new engineering construction, new building and machinery and equipment. Meanwhile, public investment rose 0.7 percent. Exports of goods and services rose 4.4 percent. Imports of goods and services fell 0.8 percent.

Net exports contributed 1.1 percentage points to GDP growth in the March quarter. The change in total inventories was an increase of AUD651 million in seasonally adjusted terms compared to an increase of AUD 522 million in the December quarter. This increase was driven by rises in wholesale trade and mining industries.

By industry, positive contributions came from agriculture, forestry and fishing (+2.5 percent, driven by livestock production which was supported by strong international demand), mining (+6.2 percent, supported by other mining, iron ore mining, oil and gas extraction, coal mining and exploration and mining support services), manufacturing (+0.2 percent, supported by a rise in food, beverage and tobacco products and machinery equipment) and retail trade (+0.8 percent).

In contrast, construction declined by 1.1 percent, driven by weakness in non-residential building construction and heavy and civil engineering construction.

Through the year, the economy grew by 3.0 percent, accelerating from an upwardly revised 2.7 percent in the September quarter and beating expectations. It is the fastest expansion since the third quarter 2012.

In trend terms, the largest contributors to the economy came from mining (+0.9 percentage points), financial and insurance services (+0.4 percentage points), construction (+0.2 percentage points), public administration and safety (+0.3 percentage points)and retail trade (+0.2 percentage points). In contrast, the largest detractor was manufacturing (-0.2 percentage points).

Real gross domestic income increased by 0.3 percent, while the volume measure of GDP increased by 0.9 percent, the difference reflecting a decrease of 2.3 percent in the Terms of trade in trend terms.

Real net national disposable income was flat quarter-on-quarter. Through the year the income fell 1.1 percent compared with a 3.2 percent growth for GDP.