Consumer spending helps keep economy in shape

A REBOUND in exports and government spending have boosted the Australian economy in the three months to June, re- energising hopes that the momentum to avoid a recession has been regained.

And despite a weaker- thanexpected rise in wages, evidence of solid consumer spending and business investment appear to have the econ- omy in sound shape to offset the effects of next year’s projected slump in homebuilding activity.

Australia’s gross domestic product grew 0.8 per cent in the June quarter, for an annualised rate of 1.8 per cent, figures from the Australian Bureau of Statistics yesterday revealed.

That was slightly below economists’ expectations of a 0.9 per cent quarterly jump fol- lowing a rally in net exports after the weather- related disruptions to coal supplies during the March quarter.

GDP in the three months to March slipped to just 0.3 per cent — the weakest rate of growth in almost eight years.

Yesterday’s figures earned a cautious tick of approval from economists and kept the nation on course to achieve average annual growth of 3 per cent in the coming year — in line with the Reserve Bank’s latest forecasts.

Contributors to the economy were broadbased in the latest quarter, spearheaded by a jump in government spending, especially at the state and local levels, which grew 25.5 per cent. The figure was boosted by the SA Government’s $ 2.3 billion purchase of the Royal Adelaide Hospital, which opened this week.

Household spending was up 0.7 per cent for the quarter, although consumers dipped deeper into their piggy banks to do so, with the savings rate sliding to a nine- year low.

Amid controversy over how much energy the nation should be exporting, a surge in liquefied natural gas shipments, coupled with greater demand for iron ore, saw the value of exports rise 2.7 per cent for the three- month period.