Australia’s economic growth fell 0.5% in the three months ended September, much more than the expected 0.1% fall.
Poor weather, the uncertainty generated by the election cycle and the ongoing slowdown in energy-related capital expenditure all contributed to a contraction in spending by consumers, business and the Government in the September quarter, she said.
The rebound in coal and oil prices in recent months, renewed activity in domestic construction and the end of the drag from falling mining capital expenditure all pointed towards a rebound in activity in the December quarter.
The July Federal election followed one of the longest campaigns in many years, Ms Howe said.
"This impacted negatively on business and household sentiment as both sectors recorded negative growth during the quarter."
The government sector was also responsible for some of the fall in GDP. A wind-back in spending accounted for 0.1% of the 0.5% drop, Ms Howe said.
New business investment fell 3.2% in the September quarter. Mining investment contracted by about 6.7% to be nearly 4% lower than a year ago. However, the end of the mining investment downturn was in sight and work on the remaining gas projects would be progressively completed during next year.
Net exports subtracted from growth in the quarter. Even though commodity prices improved, mining companies focused more on cost reduction.The Reserve Bank of Australia was likely to hold its official lending rate at 1.5%, she said.
Recent data pointed to a more robust final quarter and improved household spending growth was in line with a lift in employment.
Employment measured in hours worked climbed during the September quarter and net disposable income per head also climbed 0.5%.
Headline GDP growth slowed in the quarter but the improvement in commodity prices and incomes earned from investments overseas boosted overall net national disposable income, masking the negative headline GDP number, Ms Howe said.
"Expect the RBA to look through the reported numbers to focus on what’s happening beneath them. The RBA believes 80% of the slide in mining investment is behind them, although that still leaves more to come."
Forward data indicated a large amount of residential activity commissioned but yet to be started. If the weather improved during the end of the year, a lot of work would start, she said.
Early indications also pointed to good retail sales in October and November and government investment was likely to increase through new investment in helicopters and submarines.
