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Australia's economy strengthens as consumers lift spending
[SYDNEY] Australia's buoyant economy posted strong growth in the second quarter of the year on the back of increasing exports, consumer and government spending, official data showed on Wednesday.
The economy expanded by 0.9 per cent in the March-June quarter, following 0.7 per cent growth in the first three months of the year, to take the annual rate of growth to 3.4 per cent - the fastest pace since September 2012.
The quarterly reading was far above market expectations of 2.8 per cent, and comes after the previous quarter's year-on-year reading of 3.1 per cent.
The increase sent the Australian dollar jumping almost half a cent to 72.17 US cents.
"The national accounts for the June quarter highlight the strength and the resilience of the Australian economy, which is in its 27th year of consecutive economic growth," Treasurer Josh Frydenberg told reporters.
The economy has recorded an uneven period of expansion in recent years as an unprecedented period of mining investment reaches its end, with the Reserve Bank of Australia cutting interest rates to a record-low of 1.5 per cent to support growth.
Household spending jumped 0.7 per cent during the quarter contributing 0.4 percentage points to growth, while net exports contributed 0.1 percentage points.
Government expenditure rose 1.0 per cent in the quarter to continue its stellar growth through the year.
"(Household) consumption continues to hold up pretty well, facilitated by the savings ratio continuing to fall," JP Morgan economist Henry St John told AFP.
But he warned the strong growth was expected to weaken in the second half of the year as exports level out and consumers become unable to further draw down on their savings.