Australia's net lending reaches a record high
Australia's net lending position increased from $1.6b to $8.2b in the March quarter, predominantly due to a $3.4b increase in national net saving.
Graph 1. National net lending (net borrowing), relative to GDP, seasonally adjusted
At the sector level, net lending by households increased by $7.5b to $9.6b. This was predominantly due to net saving, which was impacted by the first wave of social assistance benefits for COVID-19 and weather related non-life insurance claims. A contraction in household final consumption expenditure also contributed to the increase, impacted by social distancing measures.
The rise in social assistance benefits, as well as higher government final consumption expenditure in response to bushfires and the onset of COVID-19 contributed to general government net borrowing increasing by $2.9b.
Private non-financial corporations were net lenders this quarter, the first time this has occurred since September 1993. The switch to net lending was driven by an increase in net saving and supported by a rundown in inventories. Primary income payable by private non-financial corporations declined, while higher commodity prices supported an increase in gross operating surplus.
Graph 2. Net lending (net borrowing), by sector, seasonally adjusted
National capital investment remains at a historic low
National capital investment decreased to 22.2% as a proportion of GDP, continuing its downward trend since December quarter 2017.
Investment by non-financial corporations fell to 10.0% of GDP. This is the eighth consecutive quarterly decline in the ratio. Private sector non-mining investment led the fall this quarter.
Household investment declined slightly to 7.7% of GDP, continuing its downward trajectory from its most recent peak in June 2016. Dwelling investment is driving this weakness, reflected in dwelling approvals remaining at low levels over the past 2 years.
Graph 3. Gross fixed capital formation, by sector, relative to GDP, seasonally adjusted