Update Australia remains home to one of the world's best performing economies, with the latest data showing growth is now back to pre-financial crisis levels.
The economy grew a seasonally adjusted 1.2 per cent in the June quarter, up from a revised 0.7 per cent pace reported for the January-March period, the Australian Bureau of Statistics reported. Economists had expected gross domestic product to register a 0.9 per cent expansion rate for the June quarter.
''It's good news for the Goldilocks economy but we don't think it will worry the Reserve Bank for the next six months or so," said Josh Williamson, an economist with Citi. "I think the government in particular will be liking this."
GDP growth was 3.3 per cent at an annual rate, faster than the 2.7 per cent pace in the March quarter, and surpassing the 2.9 per cent tipped by analysts.
Today's figures from the Australian Bureau of Statistics reinforce a slew of recent data pointing to a strengthening of Australia's economy, already one of the strongest in the developed world. The 1.2 per cent quarterly rate is the quickest since the June quarter of 2007, and underlines the vitality of the economy's recovery from last year's slowdown as much of the world slumped into recession.
"It highlights just how different the Australian economy is from the rest of the world,'' said Michael Blythe, chief economist at the Commonwealth Bank. "The most encouraging sign is some indications that the private sector is coming back in, a lot of the past 12 months has been a public sector a story and we really need the private sector to sign off on the recovery story.'
''The consumer caution angle that was one of the domestic risks appears to be evaporating pretty quickly,'' Mr Blythe said.
The Australian dollar jumped more than a third of a U.S. cent, to 89.8 US cents in recent trade, as investors raised their bets on further interest rate rises. Aussie shares held on to their strong gains after the data release to remain about 1.6 per cent higher for the day.
The Reserve Bank has raised interest rates six times since October in a bid to return lending costs closer to long-term levels as the economy recovered. Today's GDP figures did little to shift the near-term outlook for interest rates, with investors still expecting the RBA to leave its cash rate unchanged at 4.5 per cent when its board meets next Tuesday - with rates also seen at about current levels in one year's time.
Households hold up
The ABS cited household spending - as measured by so-called final consumption - as the biggest contributor to the quarterly growth spurt.
In the June quarter, such spending added a whopping 0.9 percentage points to the 1.2 per cent increase. Figures for July out yesterday also pointed to some good months ahead for retailers as shoppers spend up.
Trade also provided an impetus for growth - rather than a drag as has been typical over many years - with net exports added 0.4 percentage points to the quarterly growth tally.
Economists and traders alike cheered yesterday's release of quarterly current account figures which showed Australia's trade gap with the rest of the world narrowed by almost $11 billion in the June quarter alone. Such a shift hasn't been seen since 1961, Goldman Sachs estimates.
Mining prices continued to be key to the change in Australia's terms of trade - the relative price of goods and services the country exports compared with imports. The ABS today said the terms of trade improved 12.5 per cent in the June quarter alone, bringing the ratio to about 24.5 per cent higher than a year ago.
The outlook remains favourable too. One of the biggest drags on growth for the quarter was a draw down in inventories held by companies. That shift, which often indicates future activity as firms restock, lopped 0.7 percentage points from the quarterly growth rate.
Also, good winter rains and rising prices for food globally, particularly for wheat and sugar, suggest farmers are likely to have strong returns - another factor which will widen the growth beneficiaries in coming quarters.
BusinessDa, with Reuters
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