Australia's quarterly GDP figures have just been released by the ABS, is the country in a recession?
You may remember that the country was going through pain last quarter because of the bushfires on the east coast of Australia. Did that cause Australia to drop into negative growth?
December 2019 quarter GDP
Australia's economy registered 0.5% growth of GDP in the December 2019 quarter and 2.2% growth through the year.
However, it wasn't the domestic economy that generated most of the growth. The ABS said domestic demand remained subdued with 0.1% in the December quarter. A rise in household discretionary spending and continued increases in the provision of government services was dampened by falls in dwelling and private business investment.
Dwelling investment declined 3.4% and the construction industry saw a 2.3% fall.
The ABS also said that household income remained steady with compensation of employees recording its twelfth consecutive rise, increasing 1% during the quarter. The Australian household savings rate was 3.6% with subdued consumption and slightly higher wages.
As you might expect, the mining industry remained strong, however mining profits declined 2.6% for the quarter with growth in production volumes of 1.6%, increasing the annual growth to 7.3%, but there were lower prices for coal, iron ore and gas.
What about ASX shares?
Obviously these numbers are important for various ASX shares like BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), CSR Limited (ASX: CSR), Wesfarmers Ltd (ASX: WES) and so on.
The ASX 200 (INDEXASX: XJO) is still down 1.3% because of coronavirus worries. Share market returns have relatively little link to the quarterly GDP numbers.
Regardless of what the economy does, it's important to have a decent emergency fund and keep investing in good share investments at attractive prices.
