Australia's Q3 GDP remains sluggish on weak mining investment

HONG KONG – Australia’s GDP growth for the third quarter has come in marginally below expectations at 0.6% q/q sa (consensus: 0.7%) because of weak investment. “While quarterly outturns this year have been in line with our full-year growth projection of 2.6%, given historical revisions to the growth figures announced today, we are likely to revise our projection downward slightly,” says BBVA Bank.

“Today’s outturn increases the chances of another rate cut by the RBA in early 2014, as reflected in a sharp decline in the AUD today to 90.2 against the USD, its weakest level in three months. Nevertheless, the latest monthly activity indicators (retails sales and housing investment) have shown some strength, and at its policy meeting yesterday the Reserve Bank of Australia kept rates on hold at 2.50%, repeating its statement that previous “easing has supported interest-sensitive spending and asset values,” and that, “private demand outside the mining sector is expected to increase at a faster pace”.
“The RBA cut rates by a cumulative 225 bps from November 2011 to August 2013. In recent months the RBA has stepped up its statements that a weakening of the currency would be useful to support growth.” www.bbvaresearch.com (ATI).