GDP data shows growth still slow

The national economy expanded by 0.5 per cent through the final three months of 2014 but it still well short of growing fast enough to bring down unemployment.

Figures released by the bureau of statistics showed a lift in exports and final consumption was behind the result which took annual growth to a sub-trend 2.5 per cent.

The figures were inline with market expectations.

The bureau said net exports added 0.7 percentage points to growth while final consumption added 0.6 percentage points. But inventories subtracted 0.6 percentage points.

The strongest parts of the economy were the construction and health sectors, which added 0.1 percentage points to growth. These were offset to a degree by a fall in the contribution of the professional and scientific sector.

There was some positive news for WA with State final demand, which is domestic economic activity and excludes exports, jumping by 2.1 per cent in the quarter.

The result was driven by a lift in household spending.

But over the full year, WA's State final demand contracted by 1.7 per cent.

The figures followed yesterday's decision by the Reserve Bank to keep official interest rates at an all-time low of 2.25 per cent. In keeping rates steady, the bank said domestic demand was quite weak and warned the overall economy would grow at a below-trend level for some time.

Australia's productivity continued to improve with all measures lifting through the quarter. Real unit labor costs all fell through the final three months of the year, a sign of the sluggishness in wages.

Households continue to keep a relatively tight reign on their spending, with the household savings ratio standing at 9 per cent.

The 0.5 per cent result followed a 0.4 per cent lift in the September quarter. At a six-month annualised rate that suggests growth could actually slip further over the coming quarter.