SYDNEY (Reuters) -Australia’s financial system grew on the slowest annual tempo because the pandemic within the third quarter, disappointing hopes for a rebound as authorities spending did the entire heavy lifting.
Buyers reacted by pushing the Australian greenback 0.3% decrease to $0.6468, and markets ascribed a barely larger probability of a price lower subsequent yr, though a primary easing continues to be not absolutely priced in till Might.
Knowledge from the Australian Bureau of Statistics on Wednesday confirmed actual gross home product rose 0.3% within the September quarter, lacking market forecasts of 0.4%.
Annual development slowed to 0.8%, from 1.0% the earlier quarter, marking the slowest tempo since late 2020.
The Reserve Financial institution of Australia had anticipated financial development would decide as much as 1.5% by the tip of the yr as tax cuts flowed by to households’ wage pockets and shoppers grew to become extra assured that rates of interest wouldn’t improve once more.
Nonetheless, the surprisingly weak third quarter result’s placing that in jeopardy.
For the quarter, authorities spending made a significant contribution to development, however family spending, which accounts for half of GDP, added nothing to GDP.
GDP per capita dropped one other 0.3%, down for the seventh straight quarter.
The central financial institution has stored rates of interest regular at a 12-year excessive of 4.35% for the previous yr and signalled little inclination to ease anytime quickly, partly as a result of stunning resilience of the labour market.
Headline shopper worth inflation slowed sharply to 2.8% within the third quarter, primarily attributable to authorities rebates on electrical energy payments. Core inflation was extra persistent at 3.5%, nonetheless above the RBA’s goal vary of two% to three%.
Monetary markets are pricing in virtually no probability of a lower within the 4.35% money price on the RBA’s subsequent assembly on Dec. 10.
