- The Australian economy grew 0.8% during the March quarter 2022, and 3.3% over the past year. Strength came from household consumption, which grew 1.5%, and from a record $7.5 billion ramp-up in inventories. The inventory build-up largely reflects the business community replenishing stocks.
- Household spending was strongest in the eastern States most affected by Delta wave restrictions in the second half of last year. The Australian Capital Territory (3.0%), Victoria (2.7%), and New South Wales (1.9%) saw the strongest growth in household consumption in the March quarter.
- The Omicron wave and devastating floods in NSW and Queensland hit the labour market during the quarter, with hours worked falling by 0.9%. The unemployment rate was 3.9% in the month of March, which was the lowest unemployment rate since August 1974.
- We continued eating out and started travelling again. Purchases of food from supermarkets and other retailers fell 2.0%, but spending in restaurants, cafes and pubs surged 5.3%. With the Western Australia border reopening in early March and restrictions on international travel lifted, spending on transport services grew a whopping 60.0%.
- Consumer prices rose 2.1% during the March quarter 2022 and 5.1% over the year. This was the fastest quarterly growth in consumer prices since September quarter 2000 and the fastest annual increase since June 2001. The major drivers of consumer price increases were housing and fuel.
- Wage growth trailed inflation, despite a strong labour market. The Wage Price Index rose 0.7% during the quarter and 2.4% over the year. Quarterly wage growth was strongest in the education, arts and recreation, and admin and support industries. Most of the wage growth came from individual and collective arrangements between employers and employees, as opposed to awards.
- Australian businesses benefitted from rising prices, where mining company profits rose 14.7% on a national accounts basis despite wet weather hampering extraction on the east coast. Rising global prices pushed Australia’s terms of trade to a record high during the quarter, climbing 5.9%. The share of national income going to profits was a record high of 31.1%.
- Australia’s imports surged, growing 8.1% during the quarter, the fastest rate of growth since December 2009. Imports of passenger cars (up 32.0%) and household electrical items (up 30.4%) were some of the major drivers. In contrast, Australia’s exports fell 0.9%.
- Home building slowed for the second quarter in a row, falling 1.0%. Shortages of skilled labour and raw materials and unfavourable weather on the east coast subdued growth. The impact of the HomeBuilder program continued to dissipate.
- Support from governments remained above pre-pandemic levels. Government income support to households was $5.7 billion above pre-Covid levels and Government subsidies $3.1 billion higher. Commonwealth government consumption was up 4.4% during the quarter, partly in response to the east coast floods and procurement of Rapid Antigen tests.
- The household saving rate remained elevated but continued to ease towards pre-pandemic levels. Households saved 11.4% of their income during the quarter, down from 13.4% in the December quarter 2021.
- With global events continuing to impact the Australian economy, the June quarter national accounts are expected to continue to show some volatility.
12 things that happened in the Australian economy in March quarter 2022