Australia’s economy grew at a faster-than-expected pace at the start of this year, with exports and business inventories rising even as consumer spending remained weak, official data showed Wednesday.
The 1.0 percent growth in the first three months of 2018 was a sharp rise from the revised 0.5 percent in the previous quarter, taking the annual rate to 3.1 percent.
The expansion was the strongest since the June quarter of last year, and above central bank and analysts’ expectations.
The new figures sent the Australian dollar jumping a quarter of a cent to 75.56 US cents.
‘The Australian economy… is once again back up above the long-running average (of about 3.0 percent) again,’ Treasurer Scott Morrison told reporters in Canberra.
‘Australia is… leading the advanced economies of the world, bettering the average growth in the OECD, and, of course, all of the G7 nations once again.’
The economy has experienced an uneven period of growth as an unprecedented investment in mining ended, with the Reserve Bank of Australia (RBA) cutting interest rates to a record low of 1.50 percent to boost non-resources industries.
While businesses have posted stronger profits and boosted inventories, consumer spending has been a weak point amid tepid wages growth.
‘While this is definitely a strong print in terms of the headline magnitude, the consumption story is still pretty soft,’ JP Morgan economist Tom Kennedy told AFP.
‘That might be symptomatic of the saving rate already being very low and wage levels being very benign. Households are constrained… on how much more they can spend.’
Uncertainty about consumer spending and weak wages growth have seen economists forecast the Reserve Bank to remain on the sidelines for several more months, with expectations of a rate rise in 2019.