Source: Australian Parliamentary Secretary to the Minister for Industry
Today’s National Accounts show Australia’s economy is gathering momentum in the face of global economic uncertainty.
The economy grew 0.6 per cent in the June quarter, to be 1.8 per cent higher through the year.
This is a welcome and substantial pick‑up in growth.
The result was better than most economists expected.
It is the equal fastest quarterly growth rate in almost three years and the fastest annual growth rate in almost two years.
Quarterly growth was double what it was in the previous quarter, following revisions.
It’s a very encouraging outcome as some comparable economies such as Germany and Canada went backwards in the quarter.
Today’s very welcome numbers confirm the private sector recovery we’ve been planning and preparing for is gathering pace.
New final private demand grew 0.6 per cent in the quarter, to be 1.9 per cent higher through the year.
Private demand contributed 0.4 of a percentage point to growth.
GDP per capita grew 0.2 per cent in the quarter.
Amidst intense global economic volatility, the Australian economy is in an enviable position.
Last financial year, we achieved what no major advanced economy could – continuous economic growth, unemployment in at least the low fours and inflation below 2.5 per cent.
Australia is one of only six advanced economies that have grown every quarter for the last three years.
Thirty‑two out of 38 OECD nations have gone backwards for at least one quarter in the last three years, but Australia is not one of them.
Australia now has the equal fastest annual growth when compared to the major advanced economies.
Since we were elected, employment growth has been much stronger than any major advanced economy.
Today’s figures show growth in private demand continues to improve, supported by higher wages, lower interest rates and tax cuts for every taxpayer.
The primary driver of the lift in private demand was growth in consumption.
Consumption grew 0.9 per cent in the quarter, contributing 0.4 of a percentage point to growth.
Growth in household spending was driven by discretionary spending including on travel, recreation and furnishings.
This saw the household saving ratio fall to 4.2 per cent, from 5.2 per cent.
Consumption is growing because real incomes are growing. Under Labor, people are earning more and keeping more of what they earn.
Real incomes per capita increased 2.4 per cent over the year, the strongest growth in almost four years. There was some volatility in the quarterly numbers driven by insurance claims and social assistance benefits that were paid out in the previous quarter following natural disasters.
The momentum in annual real incomes growth reflects a combination of moderating inflation, solid wage and employment growth, the Government’s tax cuts for every taxpayer and lower interest rates.
Compensation of employees grew by 1.1 per cent in the quarter, to be 6.7 per cent through the year. This has seen the wage share of income rise to 54.0 per cent from below 50 per cent before we came to office.
Our tax cuts have contributed to a decline in tax as a share of income. Income tax as a share of income was 15.5 per cent in the quarter, down from 16.3 per cent in the quarter before our tax cuts started rolling out.
The substantial and sustained progress we’ve made on inflation was clear in today’s data, with the National Accounts consumption deflator moderating to 2.9 per cent in annual terms, the lowest in three and a half years.
As the three rate cuts in six months continue to flow through household budgets, mortgage interest costs are falling. Mortgage interest costs have fallen by around $800 million since the end of last year.
Private investment made an important contribution to growth.
Dwelling investment rose 0.3 per cent. This is the sixth consecutive quarter of growth, the longest run of quarterly growth in a decade.
In annual terms it grew 4.8 per cent, which is four times the decade average and much stronger than the −5.1 per cent we inherited.
Business investment fell 0.4 per cent in the quarter, to be 0.2 per cent higher through the year. The completion of large mining and renewable energy projects was the primary driver of the fall in business investment in the quarter.
This was partly offset by solid growth in computer software including artificial intelligence investment. Looking ahead, the pipeline of non‑dwelling construction projects and renewables projects remains strong and will support growth in business investment going forward.
Since we came to office, new business investment has grown by an annualised average of 3.9 per cent, compared to negative 1.3 per cent growth under our predecessors.
Public demand played an important role in keeping our economy growing, but now the private sector is taking its rightful place as the primary driver of growth.
New public final demand grew by 0.2 per cent, making no contribution to overall growth, and this follows the decline in the previous quarter.
The rundown in inventories in the quarter was partly offset by a rebound in iron ore and LNG exports, which were disrupted by bad weather in the previous quarter.
Productivity rose 0.3 per cent in the quarter, to be up 0.2 per cent through the year.
While we welcome the lift in quarterly productivity, we know quarterly outcomes can be volatile and there is more to do to turn around our longstanding productivity challenge.
Under Labor, inflation is down, debt is down, real wages are growing, unemployment is low, interest rates are falling, and economic growth is picking up.
We’re continuing to make welcome progress, but there’s more to do because Australians are still under pressure, the global economy is uncertain and our economy needs to be more resilient and productive.