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Australia GDP Expands 3.3% On Quarter In Q3

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Australia's gross domestic product climbed a seasonally adjusted 3.3 percent on quarter in the third quarter of 2020, the Australian Bureau of Statistics said on Wednesday.

That beat expectations for a gain of 2.6 percent following the 7.0 percent drop in the second quarter.

On a yearly basis, GDP fell 3.8 percent - but that also beat forecasts for a decline of 4.4 percent following the 6.3 percent drop in the three months prior.

The GDP deflator was down 0.1 percent on quarter after slipping 0.6 percent in Q2.

Domestic final demand contributed 4.3 percentage points to GDP growth. Household final consumption expenditure contributed 4.0 percentage points as restrictions lifted for households and businesses. Public demand contributed a further 0.3 percentage points.

After falling a record 12.5 percent in June quarter, household spending rebounded in September quarter, rising 7.9 percent. Spending remained weak, down 6.5 percent through the year.

Reductions in COVID-19 case numbers led to the relaxing of social distancing measures and other restrictions, encouraging spending on services which rose 9.8 percent. Hotels, cafes and restaurants, recreation and culture and transport services rebounded. Spending on health services recovered as deferred elective surgeries and visits to medical practitioners resumed.

Spending on goods increased 5.2 percent this quarter and is up 3.5 percent through the year.

Victoria's state final demand fell 1.0 percent, the only state to record a fall, driven by declines in household spending and investment. More stringent restrictions associated with the second lockdown resulted in a 9.8 percent fall through the year. Household spending declined 1.2 percent in September quarter, driven by clothing and footwear, furnishings and recreation and culture. Spending on food rose 6.6 percent, partly offsetting the fall, as households prepared for the second lockdown.

The household saving to income ratio declined from its record high last quarter but remains elevated at 18.9 percent. The fall was driven by the partial recovery in household consumption, which outpaced income growth.

Household disposable income grew 3.4 percent, reflecting increases in both labor and non-labor income as activity in the economy increased.

Private investment fell 0.2 percent this quarter, with increased housing investment activity offset by weaker business investment (-3.0 percent). Ownership transfer costs increased 21.4 percent, as housing market activity rebounded following social distancing measures in the previous quarter. Renovations and home improvements activity drove a 5.1 percent rise in alterations and additions.

Government final consumption expenditure increased 1.4 percent, the ninth consecutive rise, driven by increased social benefits to households as patient visits to medical practitioners and elective surgeries resumed this quarter, following the easing of restrictions.

Imports of goods and services rose 6.5 percent, supported by increased demand for consumption goods as restrictions on the economy lifted. Exports of goods and services fell 3.2 percent, reflecting continued international travel bans and reduced demand for Australia's mining commodities. The detraction from net exports this quarter is the largest since September quarter 1980.

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