Australia's GDP Expands at 0.9%

Darlington Musarurwa
03 Mar, 2010
New York City

Australia

[R]3:00 AM New York, 7:00 PM Sydney – Australia’s fourth quarter GDP rose 0.9% from the third quarter and 2.7% in 2009. Australia is one of the few countries that averted a significant economic slowdown and unemployment barely crossed 6%. The GDP is expected to accelerate to 3.25% rate in the fourth quarter of 2010. Australia’s service industry contraction eases in February.[/R]

Australian benchmark stocks rose 0.7% after the last quarter gross domestic product advanced 0.7% and service industry contraction eased in February.

Commodity stocks gained as gold prices climbed 1.7% to $1,137 per ounce and crude oil prices edged up 0.2% to $79.9 per barrel.

In Sydney trading ASX 200 Index advanced 0.7% or 33.8 to 4,735.70.

Of the ASX 200 index stocks, 124 gained, 59 dropped, and 17 were unchanged. St Barbara Ltd led gainers in the index shares with a rise of 8.9% followed by Panoramic Resources increasing 8%.

The Australian dollar advanced 0.1% to 90.42 U.S. cents.

Australia’s GDP Rises 0.9% in December

Australian Bureau of Statistics reported today that the country’s GDP gained 0.9% in the three months to December from a quarter earlier and non-farm GDP rose 0.8%.

Terms of trade climbed 2.9% and real gross domestic income advanced 1.5% in the period.

Positive contributors to expenditure on GDP were private capital formation expenditure on machinery and equipment 0.8 percentage points, public gross fixed capital formation 0.6 percentage points, and household final consumption expenditure 0.4 percentage points.

The largest negative contributor was imports, which fell 1.6 percentage points.

In addition, manufacturing contributed 0.4 percentage points to GDP growth while construction and wholesale trade both contributed 0.2 percentage points.

The GDP increased 2.7% in 2009 and the economy is expected to accelerate to a growth of 3.25% in the fourth quarter 2010.

Service Industry Contraction Eases

Australian Industry Group/Commonwealth Bank Performance of Services Index rose 0.9 points to 48.3 in February.

A reading below 50 shows contraction, while a reading above 50 indicates expansion.

Growth was strongest in finance & insurance, while conditions remained soft in retail trade for the third straight month.

AIG group chief executive Heather Ridout said, “Consumer-related services sectors bore much of the brunt of the cumulative impact of the consecutive interest rate rises and the gradual withdrawal of the fiscal stimulus.”

ASIC Secures A$13.5 million for Wespoint Investors

The Australian reported today that the Australian Securities and Investments Commission secured A$13.5 million settlement for investors in failed property scheme Westpoint Group.

The settlement with Melbourne-based trustee State Trustees allows about 525 eligible investors to submit a proof of claim to receive any distribution of settlement funds.

ASIC had commenced proceedings against State Trustees in March 2008.

Group members are likely to recover approximately 71 cents for every dollar they invested in the mezzanine notes.

ASX Movers

Spark Infrastructure Group led the decliners in the S&P ASX 200 index with a loss of 7.5% followed by losses in Platinum Australia Limited of 5.0%, in Roc Oil Company Limited of 4.2%, in Goodman Fielder Limited 3.8% and in QBE Insurance Group Limited 3.4%.

St Barbara Limited led gainers in the S&P ASX 200 index with a rise of 8.8% followed by gains in Panoramic Resources Limited 8.0%, in Gindalbie Metals Ltd of 7.8% and in Virgin Blue Holdings Limited of 7.0%.

Other Movers

Fortescue Metals Group Ltd climbed 3.1% to A$4.85 after the iron-ore producer participated in a rally in resource stocks.

National Australia Bank Limited added 2.3% to A$26.20 after the release of fourth quarter GDP data.

Rio Tinto Limited gained 2.5% to A$73.87 and the mining company chief executive Tom Albanese expressed concerns about a double-dip recession, which would depress demand for commodities in the next 18 to 24 months, according to The Australian newspaper.

Wesfarmers Limited the retailer advanced 1.4% to A$32.57.