GDP grows by 1% in September quarter but construction still weak: Midday Roundup

The Australian economy grew by a seasonally adjusted 1% in the September quarter, higher than expectations, and taking annual gross domestic product growth to 2.5%.

In volume terms, the growth was 1%, after a revised 1.4% increase in the June quarter. GDP was negative in the March quarter.

Real gross domestic income grew by 1.6% in seasonally adjusted terms, boosted by the 2.7% increase in the terms of trade.

The Australian Bureau of Statistics said industries that drove the growth were construction (up by 0.4%) and mining (up by 0.3%).

Westpac said the figures leave the Reserve Bank’s forecast for growth of 2.75% through calendar 2011 looking “more achievable, requiring a 1.0% quarter for Q4.”

Shares up 1% in morning trade

The Australian sharemarket has opened 1% higher this morning despite a weak lead from overseas, with investors waiting to see how the major banks will move with regard to yesterday’s decision by the RBA to lower interest rates.

The benchmark S&P/ASX200 index was up 24 points or 0.6% to 4286.1 at 12.00 AEST, while the Australian dollar fell slightly to $US1.02c.

AMP shares rose 1.41% to $4.33, while ANZ shares gained 0.76% to $21.15. Commonwealth Bank shares rose 0.44% to $49.92, as Westpac rose 1.07% to $21.69.

In the United States, the Dow Jones Industrial Average rose 52 points or 0.4% to 12,150.3.

The ABS said growth was driven by a 1.5% contribution to growth from capital expenditure on non-dwelling construction, but inventories and exports fell 0.8% and 0.6%.

Construction industry lifts in November, but still weak

The construction industry lifted in November, but remains weak, according to a private sector survey.

The Australian Industry Group/Housing Industry Association Performance of Construction Index (PCI) was up 4.9 points to 39.6 – with a reading below 50 indicating a contraction.

The new order sub-index lifted 6.7 points to 38.6 and house building activity also lifted to 38.6, boosted by the interest rate cut on Melbourne Cup Day.

“While still far from satisfactory, the sector overall appears to be pulling back from the accelerating pace of decline reached in August and September,” Australian Industry Group director public policy, Peter Burn, said.

Housing Industry Association senior economist, Andrew Harvey, said there was “no hiding from the fact that house building activity has contracted for 18 straight months and apartment building activity has now contracted for 19 straight months.”

“It is clear that the Federal Government needs to urgently turn its attention to stimulating new home building in this country.”

Greece approves new austerity budget

The Greek Parliament has passed a new budget for 2012 that will set out tough deficit goals as European leaders come under pressure to control their swelling debt problems.

The majority of the Parliament backed the interim government’s plan for a new budget, but the cutbacks demanded will be unpopular.

“Our actions will determine the country’s economic future, not only for 2012 but for the entire decade,” said Prime Minister Lucas Papademos, who took over last month.

“Our place in Europe is non-negotiable. The Greek people will defend it in every way possible,” he said. “Europe and our common currency remain, despite the crisis, one of the noblest achievements of recent history.”

The move comes after talks between leaders suggested the feuds could escalate to a point where some nations are no longer included in the Eurozone.