Dec. 5 -- Australia's economic growth accelerated in the third quarter, driven by consumer spending and exports.
Gross domestic product increased 1 percent from the second quarter, when it rose a revised 0.7 percent, the Bureau of Statistics said in Sydney today. That matched the median estimate in a Bloomberg News survey of 25 economists.
The pickup in growth is evidence Australia's A$1 trillion ($870 billion) economy has so far ridden out the global credit slump as a three-decade-low jobless rate and rising wages drive household spending, and China's demand for commodities boosts profits for mining companies. Faster growth may also stoke inflation and prompt the central bank to raise interest rates by early next year.
``The fundamentals for this year and next year remain sound,'' said Peter Pontikis, treasury strategist at Suncorp-Metway Ltd. in Brisbane. He also said the economy is ``running at capacity, which isn't sustainable.''
The Australian dollar bought 86.95 U.S. cents at 12:44 a.m. in Sydney from 87.24 cents immediately before the report. The currency is falling after the central bank earlier today said inflation will probably slow next year.
The yield on the benchmark 10-year government bond dropped 4 basis points after the growth report to 5.94 percent. A basis point is 0.01 percentage point.
Consumer Spending
Gross domestic product, the total of all goods and services produced in Australia, rose 4.3 percent in the three months ended Sept. 30 from a year earlier, today's report showed. Economists had estimated 4.8 percent annual growth.
The Reserve Bank of Australia, headed by Governor Glenn Stevens, today kept the benchmark interest rate unchanged at 6.75 percent, citing ``heightened uncertainty about the international outlook'' and rising credit costs.
Australian Treasurer Wayne Swan said today the economy, while ``growing strongly,'' faces ``challenges'' including drought and the risk of higher inflation.
Stevens raised rates by a quarter point last month and in August to an 11-year high. Nineteen of 24 economists surveyed last week by Bloomberg News say he will increase the benchmark to 7 percent by the end of the first quarter of 2008.
Higher borrowing costs failed to quell retail spending in the third quarter as consumers benefited from job gains, rising share prices and income-tax cuts promised during an election campaign that saw Prime Minister Kevin Rudd's Labor Party wrest power last month from John Howard's Liberal-National coalition after 11 1/2 years.
Hiring Workers
David Jones Ltd. and Harvey Norman Holdings Ltd. are among retailers opening more stores and hiring workers as sales increase.
``The economy here is extremely strong,'' Gerry Harvey, chairman of Harvey Norman, Australia's biggest electronics retailer, said in an interview yesterday. ``If you put an ad in the paper to get anyone to work for you, it's very difficult to get them.''
The economy recorded its longest run of jobs growth in 12 years in the 12 months through October and the unemployment rate reached 4.2 percent in September, the lowest since 1974. Wages climbed 4.2 percent in the third quarter from a year earlier, matching the highest annual increase in at least a decade.
Household spending was the biggest contributor to third- quarter growth, rising 1.2 percent from the previous quarter, followed by exports, which gained 2.3 percent, today's report said.
Also stoking growth, residential construction climbed 1.6 percent in the third quarter from the previous three months and commercial building work jumped 7.6 percent.
Still, there are signs households and companies may trim spending in coming quarters as a U.S. housing recession and resulting credit-market slump threaten to slow global growth.
Retail Sales
Australia's retail sales growth slowed in October for a second month and home-building approvals fell, the government reported yesterday. Company profits unexpectedly declined in the third quarter for the first time in more than two years, the government said on Dec. 3.
Business spending on new equipment, buildings and plant fell 6.5 percent in the third quarter from the previous three months, a report on Nov. 29 showed.
Slower spending may give the central bank more scope to delay further interest-rate increases next year if inflation, which the Governor Stevens Bank forecast last month will remain above the top of his 3 percent ceiling until June, begins to slow.
``We think inflation is probably close to a peak,'' said Steve Ryan, an economist at St. George Bank Ltd. in Sydney. ``The global economy, particularly the U.S. economy, does seem to be slowing fairly markedly.''
The rout in the U.S. housing industry has fueled volatility in global equity markets, prompted the Federal Reserve to cut interest rates and sparked speculation global economic growth will cool as the world's largest economy slows.
The chain price index, a measure of retail prices in Australia's economy, climbed 0.2 percent in the third quarter from a year earlier, today's report showed.
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