Australian economy expands a modest 0.6% in third quarter

Australia's mining-powered economy expanded a modest 0.6 per cent in the three months to September and 2.3 per cent on-year, according to data that came in short of consensus on Wednesday. -- PHOTO: BLOOMBERG
Australia's mining-powered economy expanded a modest 0.6 per cent in the three months to September and 2.3 per cent on-year, according to data that came in short of consensus on Wednesday. -- PHOTO: BLOOMBERG

SYDNEY (AFP) - Australia's mining-powered economy expanded a modest 0.6 per cent in the three months to September and 2.3 per cent on-year, according to data that came in short of consensus on Wednesday.

The Australian Bureau of Statistics figures compared with analyst forecasts of 0.8 per cent for the quarter and 2.6 per cent on-year, underscoring the challenges for the commodity-rich nation as it transitions away from a decade of dependence on mining.

The Australian dollar dipped on the disappointing data, which was seen as increasing the case for stimulatory interest rate cuts, slipping to 90.90 US cents from 91.35 US cents before its release.

Commodities continued to underpin growth, contributing 0.3 per cent to the increase in gross domestic product in the quarter, according to the ABS.

But Australia's terms of trade, a measure of export prices versus import prices, fell 3.3 per cent in the quarter as commodity prices plunge amid slowing demand from China and new supply flooding the market.

The year-on-year growth rate of 2.3 per cent was well below long-term averages of about 3.25 per cent.

Australia's central bank left interest rates on hold at their record low 2.50 per cent on Tuesday as earlier cuts continue to trickle down through the economy.