Economy Declines 0.5 % Under Turnbull – The Worst Since 2011
The Australian economy has decreased 0.5 % in the September quarter 2016, the first quarter of negative growth since the Queensland flood affected March quarter 2011.
According to ABS data the economy contracted in a number of areas this quarter. Private investment in new buildings detracted 0.3 percentage points from GDP growth, while new engineering and new and used dwellings detracted 0.2 and 0.1 percentage points respectively. Public capital expenditure detracted 0.5 percentage points from growth as it declined from elevated levels in the June quarter. Net exports detracted an additional 0.2 percentage points from growth. Australia’s terms of trade rose 4.5 per cent through the September quarter.
The reduced building activity is reflected in the output of the construction industry which fell 3.6 per cent for the quarter and was the largest contributor to the fall in GDP growth on an industry basis. A number of other industries also recorded below trend growth, or declined, this quarter, including financial and insurance services, professional scientific and technical services, rental hiring and real estate services and administrative support services. The largest offset to these falls was agriculture which grew 7.5 per cent. Mining production contributed no growth, but maintained its historically high levels of production.
Subdued activity in the building industry contributed to a decline in the income of small businesses, with gross mixed income down 5.8 per cent. Private non-financial corporation’s gross operating surplus increased 1.2 per cent, supported by stronger mining commodity prices. Compensation of employees increased 1.3 per cent, and real gross national income increased 0.9 per cent for the quarter to be 3.2 per cent higher through the year.
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