Australia’s economy grew moderately last quarter as a strong trade performance and the largest rise in consumer spending in almost three years helped offset softness elsewhere.
Wednesday’s data showed gross domestic product (GDP) expanded by 0.5 per cent in the fourth quarter of last year. In the previous quarter it rose by 0.4 per cent.
The bad news is we’re still running below trend, which will keep upward pressure on the unemployment rate
“The good news is we’ve now completed 23 years of continuous growth,” said Michael Blythe, chief economist at Commonwealth Bank. “The bad news is we’re still running below trend, which will keep upward pressure on the unemployment rate and the RBA (Reserve Bank of Australia) on rate-cut watch.”
The result matched market forecasts, which was a relief to many analysts who had feared the risks were for a weaker outcome and lifted the local dollar a quarter of a cent against the US dollar.
The economy grew 2.5 per cent for all of last year, a result that actually topped the United States but remained well short of the 3.25 per cent growth that is considered its ideal running pace.
After trimming interest rates to a record low of 2.25 per cent in February, the RBA skipped a further move this week but left the door wide open for an easing in coming months.
Interbank futures imply a better than 50 per cent chance of a cut in April and are fully priced for a move in May.