Australian dollar uplifted on the back of GDP hitting 3.4% of annual growth

This morning Australian dollar spiked 0.5% to US72 cents as gross domestic product (GDP) climbed by 0.9% in June Quarter, beating the expectation of 0.7% growth. As per the reports, GDP annual growth of 3.4% records the fastest pace in nearly six years.

This solid growth is principally powered by household consumption and strong public spending in addition to government-led infrastructure programs.

Chief Economist for the ABS, Bruce Hockman said that domestic demand grew by 0.6% for the June quarter due to 0.7% increase in household spending reflecting strong sales of food, furnishings and household equipment, recreation and culture. [optin-monster-shortcode id="wxhmli4jjedneglg1trq"]

But the year in which Australian households have saved less and spent more, household saving ratio fell from 1.6% to 1% in June quarter 2018, that’s records a lowest level since December quarter 2007.

However, wages and employment grew by 0.7% during the second quarter, up 4.8% over the year. Real GDP per capita rose 0.5% over the quarter and 1.8% over the year, reflecting the impact of Australia’s population growth.

The chief economist, Paul Dales warned not to celebrate much while raising concern on housing slump. The recent reports have indicated that there is an expectation of deep cut in housing prices which could be as steep as 12% in next four years.

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