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The Australian economy expanded by 2.8% in 2005-06, which is lower than the 3.6% average growth experienced during the past decade. In 2005-06, Real net national disposable income (up 4.4%) grew more strongly than GDP, reflecting strong growth in the Terms of trade (up 10.8%). The Household saving ratio was -0.7% for the year, up from -1.9% in 2004-05. The index of Market sector (footnote 1) labour productivity increased by 2.2%. The index of Market sector Multifactor productivity (MFP) was unchanged in 2005-06, reflecting a 2.6% increase in Gross value added for the Market sector against an increase of 2.6% in total labour and capital inputs.
Expenditure of GDP
The growth in GDP was underpinned by contributions from Household final consumption expenditure and Private gross fixed capital formation (investment). Recreation and culture (up 4.4%) and Rent and other dwellings services (up 3.6%) were the two largest contributors to growth in HFCE. Investment in New engineering construction (up 29.9%), New machinery and equipment (up 14.3%) and New building (up 12.2%) all experienced strong growth. Total public investment (up 7.4%) also contributed to the growth.
From an industry perspective, growth over 2005-06 was recorded in most industries including Construction (8.3%), Finance and insurance (5.8%) and Property and business services (3.5%). Agriculture, forestry and fishing increased by 3.7% in 2005-06 following a fall of 0.7% in 2004-05. Manufacturing fell by 0.4%, with falls in all sub-components except for Non-metal mineral products (up 11.5%) and Machinery and equipment (up 5.7%). Mining fell 2.5% during 2005-06 down from a 5.0% increase in 2004-05.
Income from GDP
In the Income components of GDP, there was strong growth in Compensation of employees of 7.4%, growth in Gross operating surplus (GOS) of Non-financial corporations of 12.1%, growth in GOS of Financial corporations of 12.2% and a 2.6% increase in Gross mixed income.
Prices in the National Accounts
The annual movements for the Chain price indexes for GDP and Domestic final demand were 4.8% and 2.8% respectively. This gap in price movements is mainly caused by changes in prices paid for Imports and the prices received for Exports.
Growth in Multifactor productivity (MFP) was flat in the market sector in 2005-06. In addition to the growth in labour input of 0.3%, there was a strong increase capital services in 2005-06 of 5.6%. Total combined inputs (capital services and labour) grew by 2.6% compared to output growth of 2.6%.
Net worth is defined as the difference between Total assets and Total liabilities. Australia's Net worth at the end of June 2006 was estimated to be $5,336 billion in current prices, an increase of $448 billion (9.2%) since 30 June 2005. At 30 June 2006, in current prices, Household assets totalled $5,441 billion and liabilities stood at $1,012 billion. This resulted in net worth of $4,429 billion, an increase of 11.2% from the previous year.
Investment at Current Prices
As a proportion of GDP, in 2005–06 investment by Non-financial corporations was 13.2%, Household investment 10.5%, General government investment was 2.1% and Financial corporations investment was 0.8% of GDP.
In 2005-06 the ratio of imports to GDP was 21.8% and the exports to GDP ratio was 20.3%. Since 2000-01 imports increased 55.6% in volume terms compared to 6.0% growth in exports.