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Colin Brinsden, AAP Economics and Business Correspondent

Economy grows 3.1% in December quarter

The Australian economy grew by 3.1 per cent in the December quarter, continuing the strong rebound from last year's recession.

The result was stronger than expected and followed an upwardly revised 3.4 per cent gross domestic product recovery in the September quarter.

However, the impact of the downturn lingers on, with the annual rate remaining in negative territory at a 1.1 per cent contraction, but this was better than both the Reserve Bank and Treasury had previously predicted.

The Australian Bureau of Statistics said this is the first time in the more than 60 year history of the national accounts data that GDP had grown by more than 3.0 per cent in two consecutive quarters.

Meanwhile, more up to date data shows the construction industry is strengthening.

The Australian Industry Group/Housing Industry Association performance of construction index showed all four sectors it covers recovered strongly in February with housing activity surging to a record high.

Apartment building also turned positive for the first time in three years.

While the overall index did ease 0.2 points to 57.4 in February, a reading above 50 indicates the sector is expanding.

Ai Group head of policy Peter Burns said employment and activity levels both built on the gains in recent months.

"While recent data has been encouraging, the immediate outlook is mixed with new orders higher only in the housing segment," he added.

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