Australian dollar hits four-year low on weak GDP figures

THE Aussie dollar has dropped below 84 US cents for the first time since 2010, following disappointing GDP figures released this morning.

THE Australian dollar has fallen below 84 US cents for the first time since 2010 following disappointing economic growth figures.

The local currency hit 83.97 US cents, its lowest level since July 2010, after the figures were released at 1130 AEDT on Wednesday, down from 84.62 cents just before.

Australia’s economy grew by 0.3 per cent in the September quarter and by 2.7 per cent in the 12 months to September, official figures show.

Gross domestic product (GDP) growth was expected to rise by 0.7 per cent in the quarter for an annual rate of 3.1 per cent, according to AAP’s survey of 15 economists.

The September quarter growth follows a 0.5 per cent rise in GDP for the June quarter, the Australian Bureau of Statistics (ABS) said on Wednesday.

A drop in non-residential construction was the main driver behind the weaker-than-expected figures, JP Morgan economist Tom Kennedy said.

“Non-dwelling construction took off 0.6 per cent and that was clearly the biggest drag and that was a bit of a surprise to us,” he said.

A drop in non-residential construction was the main culprit.

“Private capital expenditure is the key drag here and is the big reason why we got the downside surprise.

“Non-mining is picking up in a broad sense but it hasn’t really picked up sufficiently, it seems, to really offset the weakness in the resources sector.”

Household spending rose 0.5 per cent in the September quarter and was up 2.5 per cent over the year to September, seasonally adjusted.

Total investment in housing fell 0.9 per cent in the quarter to be up 6.8 per cent in the year to September.

Total gross fixed capital formation — investment by households, businesses and government — fell 2.7 per cent in the quarter and was down 2.8 per cent over the year.

Domestic final demand, a measure of total spending in the economy, fell 0.3 per cent in the quarter and was up 0.9 per cent over the year.

A key measure of inflation, the implicit price deflator for household final consumption, was flat in the September quarter, from a rise of 0.5 per cent in the previous quarter, and was up 2.0 per cent over the year.

Farm GDP, in chain volume measures, rose 1.5 per cent in the September quarter and was down 3.9 per cent in the 12 months to September.

Originally published as Australian dollar hits four-year low on weak GDP figures