Economy grows by 0.2 percent in September quarter

Australian gross domestic product (GDP) rose by 0.2 percent in the September quarter, taking the annual rate of economic growth to 2.1 percent, according to new figures from the Australian Bureau of Statistics (ABS). Katherine Keenan, ABS head of national accounts, said: “This was the eighth straight rise in quarterly GDP, but growth has slowed over 2023.”

Ms Kennan said the quarterly increase was due to a rise in government spending and investment while household spending remained flat. Government expenditure rose by 1.1 percent in the September quarter following an 0.6 percent rise in the June quarter.

“The growth in government expenditure was driven by social benefits to households, including the Energy Bill Relief Fund rebates, and extra payments for childcare, aged care and pharmaceutical products,” she said. The energy rebates had a big impact. The ABS said electricity prices rose by 4.2 percent during the quarter. Without the rebates, they would have risen 18.6 percent.

The Federal Government also spent more on defence, funding international training exercises held in Australia during the quarter. “National and state public corporations increased their capital investment by 8.9 percent, with boosted investment in transport, communication and utilities projects,” Ms Keenan said.

Wages including superannuation rose by 2.6 percent due to an increase in the super guarantee rate from 10 percent to 10.5 percent and a bump in the minimum wage alongside low unemployment. The wage price index rose 1.3 percent, which was the fastest quarterly rise on record. More jobs had wage movement and the average change in wages was significantly higher. The unemployment rate in the month of September was 3.6 percent.

Inflation rose by 1.2 percent during the September quarter, with the biggest contributors being higher petrol prices, rents, new dwelling purchases by owner-occupiers and electricity prices. Spending on fresh food fell 0.2 percent, alcohol purchases from bottle shops fell for the fifth consecutive quarter and gambling taxes fell 6.9 percent after a similar fall in the June quarter. Those who could afford it continued the post-COVID revenge travel trend. Travel services imports rose by 19.5 percent as more Australians headed overseas during the Northern Hemisphere summer. Travel exports grew 4.4 percent during the quarter due to the FIFA Women’s World Cup World Cup and a record level of international student enrolments.

Cost-of-living pressures fuelled by sticky inflation and high interest rates pushed the household saving-to-income ratio to its lowest level since 2007. The ratio fell for the eighth consecutive quarter, with Australians now only saving 1.1 percent of their incomes.

The impact of homeowners coming off fixed home loan rates was reflected in the 7.6 percent increase in interest paid by mortgagees over the quarter. The Reserve Bank did not raise the cash rate during the September quarter. Renters continued to do it tough, with rents now up 7.6 percent on an annual CPI basis, which is the largest annual increase since 2009. Australians also paid 7.6 percent more income tax due to the ending of the low and middle income tax offset.

LONDON— Anglo American on Friday rejected a $39 billion takeover proposal from rival BHP, saying the bid “significantly undervalues” the company and setting the stage for a potential bidding war.

London-listed Anglo American said the unsolicited proposal, which was made earlier this month and which became public this week, features an unattractive structure that is too uncertain and complex .

Anglo American Chairman Stuart Chambers said the company stands to benefit from its portfolio of assets, including copper, that are likely to experience growth from trends around the energy transition. BHP’s bid, Chambers said, is opportunistic and dilutive for shareholders.

BHP’s all-share offer valued Anglo American at about $38.8 billion, and would have been contingent upon Anglo American spinning off shareholdings in two South African-listed units. The proposal represented a premium of about 31%, not including the South African-listed units, based on Tuesday’s closing prices.

Some analysts had predicted Anglo would find the bid too low and are expecting BHP to return with another. BHP has until May 22 to make a firm offer, though the deadline can be extended. Industry participants expect other large miners to also take a run at Anglo, whose share price has dropped since 2022 as lower commodity prices have ripped through the industry.

A tie-up between BHP and Anglo American, which would be the largest mining deal on record, would illustrate the growing importance of copper, a metal essential to clean-energy products , to a sector that has long relied on Chinese industrialisation to boost profits.

Copper represents some 30% of Anglo American’s output, while BHP counts a majority stake in Chile’s Escondida, the world’s biggest copper mine, among its assets. BHP bought Australian copper-and-gold miner Oz Minerals for $6.34 billion in May last year, representing its biggest acquisition since 2011.

Copper prices are up some 15% so far this year, reflecting expectations that demand for the metal will rise as the world decarbonises and supply will be constrained. Electric vehicles and wind farms use copper in much greater quantities than gasoline-powered cars and coal-fired power stations.

Anglo American has been reviewing its assets in recent months, and has held early conversations with potential buyers for its storied De Beers diamond unit, which it values at more than $7 billion, The Wall Street Journal reported Thursday.

Activist firm Elliott Investment Management holds a stake in Anglo American worth roughly $1 billion, accumulated over several months and before BHP’s move on the miner, according to a person familiar with the matter. The firm is widely known for its campaigns to push companies for change to boost their stock prices. Its view of the Anglo American holding couldn’t be learned.

That said, a jump in Anglo American’s share price following BHP’s takeover offer indicates Elliott has already profited from its holding, potentially reducing any incentive for it to take any action until the outcome of BHP’s bid becomes clearer.

Anglo’s stock on Friday traded above the implied value of BHP’s offer, indicating the market expects a higher bid to emerge.

Economy grows by 0.2 percent in September quarter

Households rein in spending but government expenditure goes up as cost-of-living rebates kick in

U.K.-listed mining giant’s chairman says the proposal undervalues the company