Australia’s economy likely to have grown 0.8 pct sequentially in Q3, says Westpac

In the past few months, indicators have provided a positive picture of Australia’s economic growth. According to business surveys, companies have become more positive in the third quarter regarding the general business environment and prospects for their own business.

“We expect growth of 0.8 percent in the production measure of GDP, with the goods-producing sector shaping up as one of the strongest performers”, said Westpac in a research report.

Fall in milk and meat processing is likely to be a drag on food manufacturing, but the manufacturing survey released earlier in the week indicated a solid result for non-food manufacturing. Also, construction is still likely to be a main contributor to growth, in spite of easing back from the screaming rate of growth witnessed in the first half of 2016, noted Westpac.

Beneficiaries of solid growth in population and the sharp increase in overseas visitors have been the retail and accommodation sectors, which had another solid quarter rising an estimated 1.4 percent, stated Westpac. Professional services also seem to have recorded another strong growth, whereas hiring, rental and real estate services would have been dragged down by strong decline in house sales after the tightening of lending restrictions in the quarter.

Agriculture production is the main negative for Australia’s third quarter growth. The dairy season got off to a slow start as a smaller herd and weak weather weighed on milk production. But other parts of the primary sector appear to have performed better.

The forestry sector appears to be a standout this quarter, off the back of the solid domestic construction sector and a resurgence in China’s demand, whereas a rise in oil extraction should see the mining sector halt its recent downward trend, according to Westpac.