Asia and Pacific

Australian economy continues to hum

Tuesday September 11, 2012

Australian GDP and unemployment data for the June 2012 quarter reveals that, overall, the Australian economy continues to grow strongly. But, the fact that the Reserve Bank of Australia has been lowering the Official Cash Rate throughout 2012 is an indicator that the RBA is worried that this growth will not continue without some help.

 

Between the March and June 2012 quarters, Australia’s GDP increased by 0.8 percent. This quarterly increase came mainly from the professional, scientific and technical services sector (up 2.0 percent), and the transport, postal and warehousing sector (up 2.3 percent).Australian GDP Growth

 

Annually, the Australian economy has grown by 3.8 percent. This economic growth is due to strong growth in the financial and insurance services sector (up 5 percent), the mining sector (up 6.3 percent), and the professional, scientific and technical services sector (up 6.1 percent).

 

An annual increase of 3.8 percent in the year to the June 2012 quarter is the best annual growth in GDP since the Global Financial Crisis; where GDP growth dropped from 5.1 percent in the June 2007 quarter, to 0.8 percent in the June 2009 quarter.

 

This annual increase is much higher than the 2.0 percent growth seen in New Zealand in the March 2012 quarter, and shows that the Australian economy is performing much more strongly than the New Zealand economy.

 

In the June 2012 quarter, Australian unemployment was 5.1 percent. This is a significant drop from the March quarter, where the unemployment rate was 5.6 percent. This decrease was due to a reduction in the number of unemployed, by 63,000. The number of employed rose by 92,000 in the June quarter, while those not in the labour force increased by just 28,000.

 

The Reserve Bank of Australia announced at the beginning of this month it would leave the Official Cash Rate at 3.5. The last time the RBA altered the OCR was on 6 June 2012, when it was lowered from 3.75 percent to its current 3.5 percent. The OCR is now 0.75 percentage points lower than at the start of 2012.