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Economic growth picks up in June

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Economic growth improved to 0.8 per cent in the June quarter, driven by stronger commodity exports and public spending and improved household consumption.

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The increase in the growth rate from the March quarter’s 0.3 per cent took annual economic growth to 1.8 per cent, the Australian Bureau of Statistics said today.

The rate of growth was slightly weaker than expected, with economists forecasting growth of 0.9 per cent in the quarter and 1.9 per cent for the year.

After hitting a one month high of 80.28 US cents overnight, the Australian dollar fell back below 80 US cents after the release of the data.

Commonwealth Bank senior economist Gareth Aird said the June quarter numbers were solid.

“The output side of the economy looks relatively healthy and in our view, we should see some further strength in real GDP growth over (the second half of 2017),” he said.

But weak household income growth continues to weigh on consumers, Aird said.

Household consumption rose 0.7 per cent during the June quarter, with spending on food, clothing and furniture increasing.

That contributed the equivalent of 0.4 percentage points to the quarterly GDP growth.

Aird said the rise in spending was generated by a fall in the level of savings.

Higher government investment added another 0.6 percentage points to quarterly GDP growth, and exports rose 2.7 per cent in the June quarter, adding 0.6 percentage points to growth.

Weaker private sector spending and inventories detracted from the growth rate.

– AAP

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