australias economy grew by only 0 3 per cent in the third quarter 903212014

According to the Australian Bureau of Statistics, the value of goods and services produced (GDP) during the September quarter grew by only 0.3 per cent, and 2.7 per cent on a year-on-year basis, missing analysts’ expectations by a wide margin of 0.7 per cent and 3.1 per cent respectively.

The unexpectedly poor growth numbers sent the Australian dollar plunging below the 84 cents mark against the US dollar to 83.89 cents at one point, a four-and-a-half-year low. At 8:08 am AEDT today the Aussie was trading at 84.04 cents.

"This should be understood for what it is – a serious warning to us as a nation that unless we tackle structural reform, including fixing our fundamental budget problem, we will not be able to guarantee rising income and living standards for Australians,” said outgoing Treasury secretary Martin Parkinson, observing that national income had fallen for the second quarter in a row, as reported by the Sydney Morning Herald.

Labor's treasury spokesman Chris Bowen said Australia was technically in an "income recession", the first since the global financial crisis in 2009, because national income fell 0.4 per cent in the September quarter after slipping 0.3 per cent in June, the newspaper reported.

This weak economic performance makes it nearly certain that the RBA will be forced to cut interest rates to hitherto unseen levels in Australia. The RBA is scheduled to meet next on February 3, 2015.

The ASX shrugged off the disappointing growth data and ended with gains for a second consecutive day. The S&P/ASX200 shot higher by 40.5 points (+0.8 per cent) to close at 5321.8, while the broader All Ordinaries index also gained 0.8 per cent to 5301.2.

The Australian reported that Saudi Arabia, OPEC’s largest oil producer and its de facto leader, thinks that the crude price could stabilise at US$60 per barrel – a level the Gulf countries could withstand. The Gulf states “don’t have a price target and if prices drop further below US$60, it won’t be for a long time,” a Gulf oil official said.

Aussie oil and gas producers were up yesterday, however, with Woodside Petroleum Limited (ASX:WPL) gaining 2.24 per cent to AU$35.64, and Liquefied Natural Gas Ltd (ASX:LNG) higher by 13.94 per cent to AU$2.86. "The swift sell-off in energy stocks, in response to the recent slump in oil prices, created an attractive entry point for long term investors into any high quality producer with a cost of production below the current commodity price," observed Wingate Asset Management portfolio manager Chad Padowitz, as reported by The Sydney Morning Herald.

Miners were mostly flat. BHP Billiton Limited (ASX:BHP) ended 0.13 per cent higher at AU$30.44 and Rio Tinto Limited (ASX:RIO) was up 0.09 per cent to AU$57.98. Fortescue Metals Group Limited (ASX:FMG), however, gained 5.45 per cent, ending at AU$2.71 on news that the company was taking a knife to costs by overhauling its top ranks and preparing for more job cuts.

Australian stocks are likely to open higher today, in the wake of US indices the Dow and the S&P500 both notching up  all-time closing highs as fresh economic data showed employment in an encouraging light, and the Fed’s Beige Book showed the US economy was continuing to gain strength. At 09:07 am AEDT, the December 14 futures contract for the S&P/ASX200 was trading higher by 0.04 per cent at 5,348.

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