* Economy grows 0.8 pct in Q4, 2.8 pct for year to beat
* Net exports and household spending offset mining slowdown
* Signs stimulus gaining traction to keep interest rates on
By Wayne Cole
SYDNEY, March 5 Australia's economy picked up
pace last quarter as surging resource exports and a revival in
consumption offset weakness in business spending -- a sign it
was weathering a slowdown in a once-in-a-century mining
The local dollar hopped higher after growth accelerated to
2.8 percent in the fourth quarter, up from 2.3 percent the
previous quarter and the fastest pace in a year. It was also a
step closer to the usual pace expected for a country that has
not suffered a recession in 22 years.
"Better than expected -- all that fuss about nothing. The
Australian economy is still motoring along and even a little bit
stronger than many had feared," said Shane Oliver, head of
investment strategy at AMP Capital Investors.
"The economy is weathering the mining investment downturn
Wednesday's data from Australian Bureau of Statistics showed
gross domestic product (GDP) rose 0.8 percent in the fourth
quarter from the third quarter, when it increased 0.6 percent.
That pipped analysts' forecasts of 0.7 percent and helped
lift the local dollar a third of a U.S. cent to $0.8980
. It will also be a relief to the Reserve Bank of
Australia (RBA) which recently closed the door on the prospect
of another rate cut, given signs stimulus was gaining traction.
Rising house and share prices have fattened household
wealth, boosted consumer confidence and revived home building.
Approvals to build new homes hit their highest in over a decade
in January and promise a bonanza for construction this year.
Such strength will be sorely needed as a long boom in mining
investment is finally rolling over and is already shaping up as
a major headwind for the economy.
Business cutbacks took a hefty 0.6 percentage points out of
growth in the quarter, and the drag will only get larger.
EXPORTS, CONSUMPTION SAVE THE DAY
Wednesday's data showed the value of all goods and services
produced in Australia was worth A$1.55 trillion ($1.35 trillion)
in current dollars, or about A$67,065 ($60,000) for each of
Australia's 23.4 million people. That compares favourably with
per capita GDP in the United States of $53,823.
Adding most to growth was international trade as the
mountains of money spent on mining expansions boosted export
volumes, while imports declined as some mining projects got
closer to completion.
A lot of this output is headed for China, which has a
seemingly inexhaustible appetite for resources. Goods exports to
China hit a record A$27.2 billion in the fourth quarter of last
year, an increase of 45 percent on the same period in 2012.
So it was positive that Chinese Premier Li Keqiang on
Wednesday told the National People's Congress the aim was to
maintain economic growth of 7.5 percent this year.
In all, net exports added 0.6 percentage points to
Australia's GDP last quarter, and no less than 2.4 percentage
points for all of 2013.
Importantly household consumption is also showing hints of
awakening after a long period of slumber, making its biggest
increase in almost two years.
Consumers have chosen to save more and spend less ever since
the global financial crisis rattled confidence, but that looks
to be changing now. Savings as a share of disposable income fell
almost a full percentage point to 9.7 percent in the quarter,
the lowest reading since mid-2010.
There was also good news on inflationary pressures in the
report with productivity up strongly in the quarter while unit
labour costs fell for the third quarter in four.
($1 = 1.1176 Australian dollars)
(Reporting by Wayne Cole; Editing by Eric Meijer)