The Australian economy performed better than expected in the three months to September, but no-one is celebrating.
The biggest rebound in exports in 15 years pushed up the September quarter growth rate to 0.9 per cent, a result not bettered for three years. But were it not for the unusual jump in exports, the economy wouldn't have grown at all.
Domestic demand shrank in the September quarter, with inflation-adjusted spending in NSW, Queensland, Western Australia, the Northern Territory and Australian Capital Territory turning down, and spending growing only in two states: Tasmania and South Australia. Spending in Victoria was flat.
"Today's national accounts show an economy in transition," Prime Minister Turnbull told parliament.
"We have had the great stimulus from the terms of trade, and the mining industry will continue to be strong and productive, but that big investment hit has come and it has gone."
Private investment slid 2.9 per cent in the quarter and 4.3 over the year. Public investment slid 9.2 per cent in the quarter and 7.9 per cent over the year. Household spending climbed 0.7 per cent in the quarter and a respectable 2.7 per cent over the year...
Treasurer Scott Morrison said businesses were "consolidating" and preparing to invest.
"We do obviously want to see business investment in the non-mining sector grow in the future and we believe that will occur in the years ahead, but only if as a country we remain focused on policies that support growth and jobs," he said.
The annual economic growth rate of 2.5 per cent is well down on the 2.75 per cent the treasury says is needed to absorb unemployment and is no faster than the 2.5 per cent recorded a year ago. During the mining booms growth ranged from 3 to 5 per cent.
Shadow treasurer Chris Bowen said the economy was weaker than the figures suggested.
"Without strong mining exports, the economy would have clearly struggled to generate much growth at all in the September quarter," he said.
In Perth Reserve Bank governor Glenn Stevens said not too much should be read into the number.
"Let's not overplay the significance, but the economy is growing, and I think you would still say the outlook is for continued moderate growth," he said.
The national accounts show Australia's terms of trade slipping a further 2.4 per cent in the quarter and 10.5 per cent over the year. A measure of export prices relative to import prices, the terms of trade directly impacts on the budget through its effect on the incomes of exporters.
The forecasts in the May budget were built around an iron ore price of $US48 per tonne. Futures trading has marked it down to less than $US40 a tonne, suggesting a downgrade when the budget update to be released on December 15.
Each $US10 fall in the price of iron ore is thought to cost the government around $2.5 billion per year in lost revenue.In The Age and Sydney Morning Herald