Australia’s economy expanded at more than twice the pace economists forecast last quarter, driven by household spending and engineering construction. The local currency soared.
First-quarter gross domestic product advanced 1.3 percent from the previous three months, when it rose a revised 0.6 percent, a Bureau of Statistics report released in Sydney today showed. The result compared with the median of 24 estimates in a Bloomberg News survey for a 0.6 percent gain.
The report covers a period before Europe’s sovereign-debt crisis weighed on Asian demand for commodities that prompted Reserve Bank of Australia Governor Glenn Stevens to make back- to-back interest-rate cuts. A pipeline of resource projects by companies such as BHP Billiton Ltd. has helped cushion a slump in manufacturing and services hit by a strong currency.
“The major driver of growth in the quarter is the investment phase of the mining boom gathering momentum,” James McIntyre, a senior economist in Sydney at Commonwealth Bank of Australia, said in a research report before today’s release.
“Despite the concerns, and hits to confidence, household spending remains solid.”
The local currency gained, buying 98.23 U.S. cents at 11:36 a.m. Sydney time, compared with 97.76 cents immediately before the data were released.
The Australian dollar, the world’s fifth-most traded currency, has gained 39 percent against the U.S. dollar since the start of 2009 and reached $1.1081 on July 27, the highest level since it was floated in 1983.
It has since retreated as signs mount that Europe’s debt crisis will sap global growth. The currency dropped 6.7 percent last month after the central bank unexpectedly cut its benchmark interest rate by half a percentage point and as data from China, Australia’s biggest trading partner, indicates a slowing economy.
Stevens yesterday lowered rates by a quarter-point to a 2 1/2-year low of 3.5 percent.
Compared with a year earlier, the economy expanded 4.3 percent in the first quarter, today’s report showed. Economists forecast a 3.3 percent year-over-year gain.
Household spending rose 1.6 percent in the first quarter, adding 0.9 percentage point to GDP growth, today’s report showed. Non-dwelling construction soared 12.6 percent, adding 1 point to growth, the report showed. Exports dropped 1.3 percent, shaving 0.2 point from the expansion.
The nation’s household savings ratio was little changed at 9.3 percent in the three months through March from 9.4 percent in the fourth quarter of 2011, today’s report showed.