AGRICULTURE was a major drag on an otherwise solid growth performance by the Australian economy in the first three months of the year.

The latest national accounts figures show that the agriculture, forestry and fishing sector contracted by 5.5 per cent in the March quarter, after adjusting for seasonal factors.

According to the Australian Bureau of Statistics, the only other sectors to record negative growth were accommodation and food services (down 3 per cent) and arts and recreation services (down 1.9 per cent).

Overall, the economy was up by 0.5 per cent in the quarter, and by 2.7 per cent over the previous year.

The modest growth result was anticipated by most analysts and is expected to keep to help persuade the Reserve Bank of Australia to keep interest rates on hold for some time.

The main growth drive in the early months of the year were transport, postal and warehousing services, which grew by 3.5 per cent, professional, scientific and professional services (up by 2.5 per cent), and financial and insurance services (up by 2.4 per cent).

The mining sector expanded by 2.2 per cent in a result which preceded the federal government's announcement of a new 40 per cent super profits tax on the sector.

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