GDP growth slows in December quarter

Australian economic growth slowed in the final three months of last year and remains firmly below trend, according to official figures.

The Bureau of Statistics says Australia's gross domestic product (GDP) increased by 0.5 per cent in the December quarter.

That took the annual rate GDP growth to 2.5 per cent, down from 2.7 per cent in the prior period.

The decline was in line with the consensus view of economists, as the Reserve Bank considers whether it should follow up on last month's cut to interest rates.

The RBA surprised by holding off on a second rate cut yesterday, but most economists expect the central bank will pull the trigger in the coming months.

"The good news is we've now completed 23 years of continuous growth, the bad news is we're still running below trend, which will keep upward pressure on the unemployment rate, and keeps the RBA on rate-cut watch," Commonwealth Bank chief economist Michael Blythe said immediately after the figures were released.

"These figures are pretty much in line with what the Reserve Bank was expecting to see, so it doesn't add to the case of a rate cut.

"But when you have a central bank with a strong easing bias, as they laid out pretty clearly yesterday, then you've got to think there's a good chance in the next couple of months we'll see another cut."

When the previous GDP figures were released a fall in real gross domestic income prompted headlines about an income recession, but that measure has rebounded modestly today with an increase of 0.2 per cent.

Accounts receivable services

Net exports and household consumption helped boost GDP, while a fall in business inventories dragged on the result.

By sector, construction and health care were strong points.

The mining sector was flat, despite continued expectations of a slowdown, with gains for iron ore and oil and gas offsetting weakness for coal miners.

Below trend growth a 'good outcome': Hockey

Treasurer Joe Hockey has described today's GDP numbers as a "good outcome" for the Australian economy.

"Australia is still performing well by international comparisons. Our economy over the past year has grown faster than the United States, Germany and obviously Japan," Mr Hockey said.

"With continuing low interest rates, low petrol prices and lower Australian dollar, we are in a good position to manage the transition in our economy and maintain our positive economic trajectory."

But Mr Hockey has admitted economic growth is currently not good enough to reduce unemployment from its current 12-year high of 6.4 per cent.

"No, and that's why we have to work harder," he said.

"We have faced the remarkable drop in iron ore prices... It's our single biggest export and that has a big impact on our economy and on our national income.

"Having said that there are good signs, unquestionably the housing construction sector is in remarkably positive shape. This is very important because it is a big employer."

But shadow treasurer Chris Bowen has accused the Government of making the transition away from a mining-led economy more difficult.

"Economic growth started to struggle right at the time of the Government's budget," Mr Bowen said.

"The Treasurer's rhetoric and his actions have had an impact on the Australian economy.

"What we are seeing is a result of a Treasurer and a Government misreading the Australian economy, misjudging the delicate transition underway in the economy from mining construction to a different type of investment, and making that transition harder by their actions."

 This News is reprinted from site http://www.abc.net.au/news/2015-03-04/gdp-growth-slows-in-december-quarter/6279428?section=business