ANALYSIS


AUSTRALIAN ECONOMY GREW BY 0.9%

Australia's gross domestic product (GDP) grew by 0.9% in the June quarter 2018, following a 1.1% rise in the March quarter. The Australian economy grew 2.9% in 2017-18.

HOUSEHOLD CONSUMPTION INCREASED FOR THE QUARTER

Household final consumption expenditure increased 0.7% in the quarter. This reflected strong retail spending across a number of components including: food, recreation and culture, and furnishings and household equipment. Conversely, spending on purchases of vehicles, transport services, and hotels, cafes and restaurants fell. Household consumption has grown 3.0% through the year.

GROWTH IN NEW DWELLING INVESTMENT

Investment in new dwellings increased 3.6% for the quarter with strength observed in Victoria and South Australia. The recent pickup in new dwelling investment reflects strong approvals in early 2018 which are now flowing through to commencements. This strength was reflected in the gross value added of the Construction industry, which grew 1.9% for the quarter.

CONTINUED STRENGTH IN GOVERNMENT EXPENDITURE

Total government final consumption expenditure rose 1.0% this quarter and remains strong through the year. National general government spending on health, aged care and disability services were the main contributors. State and local government expenditure also had strong growth with a rise in employee expenses and social benefits to households.

RISE IN MINING INVESTMENT

Mining investment rose 5.1%, this was the first rise since March quarter 2017. The result was driven by continued capital investment on machinery and equipment by mining firms and an increase in petroleum exploration expenditure. Through the year, mining investment is down 9.7%. Non-mining investment fell 2.4% this quarter. This fall in investment this quarter was driven by machinery and equipment, and follows strong growth in the previous quarter. This was partially offset by non-dwelling construction which was driven by renewables. Non-mining investment sustained at elevated levels and grew 17.7% through the year.

BROAD BASED GROWTH IN COMPENSATION OF EMPLOYEES

Compensation of employees (COE) grew by 0.7% in the June quarter 2018, due to growth in both public and private sectors. Through the year COE recorded growth of 4.8%. Health Care and Social Assistance, Construction and Public Administration and Safety were the major contributors to this growth.

HOUSEHOLD SAVING RATIO FALLS

The household saving ratio is 1.0% in the June quarter 2018, which is at its lowest since December quarter 2007. This was due to continued strength in household final consumption expenditure (0.9%) alongside more moderate growth in household disposable income (0.4%).