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Q/Q growth fell to 0.3%, and was expected to come in at 0.6%, while domestic demand came in weak.
IG Market Analyst Kyle Rodda says the numbers were a significant miss.
“The theme of a weaker Australian consumer shines through. Spending is soft, consumption looks like its still being funded by eating into savings, and income growth is down.” Said Mr Rodda.
According to the latest ABS figures, last quarter the economy grew by 0.9%, meeting expectations while GDP growth over the year slowed to 2.8% below 3.3% expectations.
ABS figures show household final consumption expenditure in September increased 0.3% contributing 0.2 percentage points to GDP growth.
September compensation of employees increased by 1.0%, while net exports contributed 0.3 percentage points to GDP growth driven by a decline in imports.
Figures show the terms of trade rose 0.8% in Q3.
The data has surprised analysts, particularly after the RBA at its meeting yesterday had talked up the growth prospects of the Australian economy, forecasting GDP growth will average 3.5% this year and next.
“Perhaps softer consumption will begin to weigh more on the economy than previously expected. Australian households don't look like they could whether a rate hike at the very least.” Said Mr Rodda.
Australian Dollar Price
The Australian dollar against the greenback crashed upon the news, coming off well-over 50 points immediately after the release. The AUD/USD price fell below 0.7300 from 0.7352 in the aftermath and is predicted to keep falling.
The post-GDP crash comes after the A-Dollar fell below 0.7350 last night as risk-proxies were dumped in reaction to China-US trade war concerns.
IG Market analyst, Kyle Rodda says “The likelihood rates traders will bring forward their RBA-hike expectations in from 2020 is rather slim.”