WA returns to growth as Australia avoids recession

Posted March 03, 2017

But a surprise contraction in the third quarter past year had raised fears it could experience a technical recession, defined as two negative quarters of growth.

The data from the NBS showed that agriculture grew at 4.03 per cent in the fourth quarter of 2016 which was a marginal decrease from the 4.54 per cent growth in the third quarter.

It meant Australia, which is transitioning from a mining investment boom to broader growth, avoided a technical recession - when the economy goes backwards for two quarters in a row.

Both of those factors improved in the December quarter, delivering a jump in growth that adds to evidence the lower dollar, cheap borrowing costs, and rebounding global demand for commodities are delivering a major tailwind for the economy.

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Home prices grew at the fastest rate in 2.5 years in December, shrugging off higher interest rates to cap a year of robust growth. Purchases of existing homes increased 3.3% in January from a month early, the National Association of Realtors said Wednesday.

However, the nation sprang to a record trade surplus of $3.5 billion in December on a massive rebound in commodity prices and an increase in the volume of resources being exported.

According to the ABC, compensation of employees, or pay packets, was down for the first time since the September quarter of 2012, with wages growth "the weakest on records back to the late-1990s".

The NBS report revealed that the nation's GDP figures for the fourth quarter of 2016 contracted by -1.3 per cent, an improvement over the -2.24 per cent contraction of the third quarter of a year ago.

The ABS figures show that is certainly far from reality and plain wrong. Net exports contributed 0.2 percentage points.

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But spending by state and local governments was revised lower to 1.3 percent growth, half the initial 2.6 percent estimate. The growth numbers were better than those projected by the RBI (6.9%) and worldwide agencies like IMF (6.6%).

"This will support GDP growth and according to the RBA will add around 0.5 percentage points to yearly growth each year in 2017 and 2018".

The terms of trade on goods and services - the prices of exports relative to the prices of imports - rose 9.1 per cent in three months to December 31.

The metal ores sub-sector grew by 7.03 per cent in Q4 of 2016 as compared to 6.93 per cent in the last quarter of 2015, thus justifying the priority that the federal government continues to give to solid minerals.

Economists had expected this performance to be repeated, and then some, the following month, typically predicting a surplus of $3.8 billion, with one analysts predicting a $5 billion positive trade balance.

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