Mining exports have given the Australian economy a higher-than-expected boost, with gross domestic product increasing by 1 per cent in the first three months of 2017.
That brings GDP growth to 3.1 per cent for the 12 months to March.
The result beat expectations of a 0.9 per cent quarterly increase, and a 2.8 per cent annual increase.
Exports of coal, iron ore and natural gas contributed 20 per cent of the GDP growth. Healthcare, property, manufacturing and financial services were also major contributors.
The news caused the dollar to jump to 76.56 US cents at 2.30pm AEST, up from 76.35 US cents immediately before the release.
ABS chief economist Bruce Hockman said the growth in exports, in particular mining commodities, accounted for half the growth in GDP.
The strong exports for the March quarter followed a week December quarter, when exports fell 1.8 per cent.
Profits for non-financial sector companies rose 6 per cent in the quarter – the strongest growth since the December quarter of 2016. That largely reflected the improved profits of mining companies, which have benefited from higher iron ore and coal prices.
But consumer spending remained weak, rising 0.3 per cent in the March quarter. Much of that increase went towards spending on insurance, energy bills and fuel bills, while spending at restaurants and on alcohol slipped by about 2 per cent.
Treasurer Scott Morrison claimed the strong results showed the Turnbull government’s economic policies were working.
“Australia has climbed back to the top of the global leaderboard, leading the major advanced economies of the world, bettering the average growth of the OECD and all G7 nations once again,” Mr Morrison said.
“Importantly, today’s results validate our budget forecasts and confirm the strengthening economic outlook we presented in the budget just a few weeks ago.
“Today’s figures show growth was broad-based, with all components contributing to growth in the quarter, including household consumption, new public final demand and net exports.”
BIS Oxford Economics head of macroeconomics Sarah Hunter said weak spending remained a weight on the economy.
“With jobs growth slowing sharply, wage rises still tracking inflation (resulting in no real wage gains for the average worker), and house price falls reducing households’ net worth, we expect spending momentum to remain subdued through the rest of this year,” Ms Hunter said in a research note.
Source: The New Daily