Australia's GDP Growth Slows to 0.5% in June Quarter

Marcus Jacob
03 Sep, 2014
New York City

Australian economic growth in June quarter slowed to an increase of 0.5% from the previous quarter and rose 3.1% from a year ago. Service industry growth continued to slow in August and iron ore price declined to a two-year low.

[R]5:00 PM Sydney, Australia – Australian economic growth in June quarter slowed to an increase of 0.5% from the previous quarter and rose 3.1% from a year ago. Service industry growth continued to slow in August and iron ore price declined to a two-year low.[/R]

Australian indexes closed nearly unchanged and tensions between European leaders and Russia remained high ahead of NATO summit meeting in Wales, UK on Thursday.

Australia’s economic growth in June quarter slowed less than expected. GDP in the quarter rose 0.5% in the quarter and surged 3.1% on an annual basis, the Australian Bureau of Statistics reported today.

Service industry growth also remained under check in August. The Australian Industry Group’s performance of service index increased 0.1 point to 49.4 in the month. Any reading under 50 indicates contraction in the sector.

Iron ore prices also declined to a low of $86.70 a ton not seen since September 2012. Iron ore prices are expected to decline more as supplies continue to ramp up from low cost manufacturers in Australia and traders in Shanghai are still liquidating inventory built in the first six months of the year

Iron ore prices have dropped 36% in the year so far and are like to trade anywhere between $75 and $80 a ton in the next six months, according to traders in Shanghai.

Australian dollar closed at 92.96 U.S. cents and in stock trading turnover jumped to 740 million shares worth $4.39 billion.

ASX 200 index slid 2.40 to 5,656.10 and the broader All Ordinaries index fell 2.30 to 5,654.60.

Brent crude oil price declined $2.45 or 2.5% to $100.34 a barrel on INCE Futures Europe Exchange in London trading.

Stocks in Review

Australian Pharmaceuticals Industry Ltd surged 17.1% to 68.5 cents after the pharmaceutical and personal hygiene maker lifted profit forecast for the year ending in August to more than $31 million, revised higher from a range between $28 million and $30 million.

GPT Group increased 1% to $4.09 after the office and industrial property developer and its wholesale office fund each bought a 50% stake in the two office towers with ground floor retail space in Melbourne for $608 million.

Noni B Limited climbed 6.7% to 48 cents after the struggling women’s fashion and clothing retailer agreed to a takeover offer from investment company Alceon Group Limited for $16.4 million. The conditional offer requires that 90% of shareholders tender shares.

The company recently reported revenue in the year ending in June declined to $112.1 million and net in the year swung to a loss of $2.3 million compared to profit of $1.5 million a year ago.