The Australian economy grew by a lower-than-expected 0.3 per cent in the September quarter as household consumption moderated against the backdrop of falling east coast property prices and resolutely sluggish wage growth.
Growth in the 12 months to September slowed to 2.8 per cent, according to data released Wednesday by the Australian Bureau of Statistics..
The growth was well below the June quarter's 0.9 per cent and fell short of market consensus forecasts, which had predicted quarterly growth of 0.6 per cent and an annual improvement of 3.3 per cent.
Sarah Hunter, Chief Australia Economist for BIS Oxford Economics, said annual GDP growth for 2018 was now likely to be below three per cent, missing the Reserve Bank of Australia's 3.5 per cent forecast.
The Australian dollar shed more than half a US cent on the announcement, briefly dropping below 73 US cents before steadying at 73.11 by 1200 AEDT.
Household final consumption expenditure increased 0.3 per cent during the quarter, contributing 0.2 percentage points to GDP growth.
"This suggests that faced with headwinds from weak wage and income growth and more recently falling asset prices, households are having to rein in increases in spending," Sarah Hunter, Chief Australia Economist for BIS Oxford Economics, said.
The slight increase in household consumption was driven by spending on food, insurance and other financial services, transport services and health.
But spending on durable goods such as cars, furnishings and household equipment, and clothing and footwear fell, indicating that consumers may be feeling the pinch.
Backing that up, the household saving ratio fell to 2.4 per cent in the September quarter as consumption expenditure continued to outpace disposable income growth.
Net exports contributed 0.3 percentage points on a decline in imports.
