A lower-than-expected growth reading for the Australian economy in the last three months of 2011 is not surprising, given recent data, economists say.
Australian gross domestic product (GDP) rose by 0.4 per cent in the December quarter, a slower pace than had been forecast, official figures show.
This reading followed a downwardly revised 0.8 per cent rise in the September quarter.
Over the year to December, GDP grew by 2.3 per cent, seasonally adjusted in chain volume terms, the Australian Bureau of Statistics (ABS) said on Wednesday.
Economists had been expecting GDP to rise by 0.7 per cent in the December quarter, according to an AAP survey of 17 economists conducted on Friday.
However, CMC Markets chief market economist Michael McCarthy said he was not surprised by the lower reading, given other official data released recently.
“It’s not a positive, but expectations have been revised downwards since we saw the capex numbers last week,” he said.
“This number is probably the low end of expectations.
“But we would bear in mind from a market point of view that it was a backward-looking number – we know there were a lot of issues in that quarter, and it’s not out of line with that.”
Mr McCarthy added that he did not expect the Reserve Bank of Australia to amend their plans for monetary policy, based on the data.
“Let’s remember there was still positive growth in the sector,” he said.
“A negative reading might have invited speculation that a rate cut was on the cards. However it will add to the case for those that were dovish on rates that there could be potentially a further cut.”
Mr McCarthy said he imagined that lower metal prices – as evidenced in Tuesday’s trade balance data – to have had an effect on the lower growth reading.
AMP chief economist Dr Shane Oliver said the GDP data showed the effects of the mining boom weren’t filtering through to the rest of the Australian economy.
“The so-called trickle-down effect is nothing more than a few drips,” he said.
“The mining boom is alive and well, but it’s not leading to much in the way of a spillover effect on the rest of the economy.”
He said the data showed that much of the domestic economy remained weak.
“Overall, it’s a pretty soft outcome. Consumer spending is just hanging in there, but there was quite pronounced weakness in investment.”
He said it was likely the Australian economy would continue to record weak growth in 2012, in contrast to the Reserve Bank of Australia’s (RBA) forecast for “around trend” growth for the year.
“I think it (the data) is consistent with the view that growth will be below trend rather than at trend over the next six months or so.
“I think, to ensure trend growth, we really need to see lower interest rates.”
JP Morgan economist Ben Jarman said the GDP was a softer than expected number, but it is nothing to worry about.
“When you look at the details, the surprise was in farm inventories, that accounted for pretty much all of the downside,” Mr Jarman said.
“The inventory dynamics don’t tell you much about the underlying story.
“It’s not much to worry about in this particular report, consumer spending slowed a little bit given that labour income has lost some momentum.
“You’ve also got capex (capital expenditure) taking a little bit of a break after a record number in the third quarter.
“Given that, we shouldn’t have that inventory drag in the next couple of quarters, the underlying growth story is actually pretty solid.”
Mr Jarman said there is nothing in December quarter GDP figures that would challenge the Reserve Bank of Australia’s (RBA) outlook for economic growth in 2012.
“In our view, they are done for this cycle of rate cuts because they said it would require fundamental domestic economic weakness to get more rate cuts and we haven’t had that and you won’t get it,” he says.
