Consumers spending more and saving less have helped the Australian economy grow by a stronger than expected rate in the last three months of the year.
The economy grew at a seasonally adjusted 0.8 per cent in the December quarter, taking the annual growth rate to 2.8 per cent. The quarterly figures were up from a 0.6 per cent expansion in the three months to September.
The Australian dollar jumped nearly half a cent on the back of the stronger-than-expected figures to trade as high as US89.97 cents.
The fourth-quarter growth was driven by a 0.6 per cent boost from net exports and a 0.5 per cent contribution from consumption. A 0.3 per cent fall in investment offset some of the gains.
Household consumption improved slightly for the period to a seasonally adjusted 0.8 per cent, while government spending lifted by 0.3 per cent. At the same time, the household savings ratio slipped from its almost decade-highs to 9.7 per cent.
"It did come back a bit," National Australia Bank senior economist David de Garis said of the fall in the household savings ratio.
"Maybe that's a sign that consumers are a little bit less anxious towards the end of last year, but consumer sentiment has come off a bit since then, as we've had a lot of potentially destabilising news on corporate lay-offs."
De Garis added that the figures showed that the domestic economy remained quite soft, with business investment contracting for the quarter.
"Consumer and business spending still remains on the cautious side," he said.
The mining, manufacturing, rental, hiring and property sectors contributed 0.1 per cent to GDP, while the terms of trade - a ratio that measures export prices to import prices - rose by 0.6 per cent.
Economists had tipped the growth rate for the quarter to come in at 0.6 per cent, and for the year-on-year rate to be 2.5 per cent.
A series of indicators released over the past week that feed into the GDP figures have painted a mixed outlook for the economy.
Data released on Tuesday showed that net exports were expected to contribute 0.6 percentage points of growth to fourth-quarter GDP.
At the same time, business investment intentions projections for the 2014-15 reaffirmed expectations of a fall-off in mining firms' spending plans but pointed to a soft outlook for investment by non-resources companies.
Meanwhile, other partial GDP indicators showed reasonably strong growth in businesses' wages and profits.
Economists have said resources exports were expected to driven GDP growth, but that domestic demand remained weak.
- Sydney Morning Herald