Australia’s economy grew at the fastest pace in three years last quarter, stoked by China’s demand for iron ore, boosting the currency on speculation interest-rate increases will resume early next year.
Gross domestic product advanced 1.2 percent from the first quarter, when it rose a revised 0.7 percent, the Bureau of Statistics said in Sydney today. That beat the median estimate in a Bloomberg survey of 23 economists for a 0.9 percent gain.
China’s demand for iron ore and coal is prompting companies such as BHP Billiton Ltd. to expand production and mines, stoking an economy that was one of the few to skirt last year’s global recession. The faster-than-expected growth may not prompt the central bank to resume the most aggressive round of rate increases by a Group of 20 member until early 2011, partly because of signs that the global recovery may be slowing.
The benchmark S&P/ASX 200 index extended gains after the report, climbing 1.9 percent to 4487.8 at 12:32 p.m. in Sydney.
Exports advanced 5.6 percent in the quarter, adding 1.1 percentage points to GDP, today’s report showed. Household spending increased 1.6 percent, contributing 0.9 percentage point to GDP.
Today’s report underscores Reserve Bank of Australia Governor Glenn Stevens’s view that the nation’s economy is expanding close to trend as income from exports surges, a key justification for raising borrowing costs six times between October and May.
Manufacturing in China, Australia’s largest trade partner, grew at a faster pace in August after the weakest gain since February 2009 in the previous month, signalling that the economy’s slowdown will be limited, a report showed today.
The Purchasing Managers’ Index rose to 51.7 from 51.2, exceeding the median forecast in a Bloomberg News survey, the Federation of Logistics and Purchasing survey showed today.
