Economic activity increased 0.8% in March quarter
Australian Gross Domestic Product (GDP) rose 0.8 per cent in seasonally adjusted chain volume terms in the March quarter 2022 and was up 3.3 per cent through the year, according to figures released by the Australian Bureau of Statistics (ABS) today.
Sean Crick, acting head of National Accounts at the ABS, said: "The economy grew for a second consecutive quarter following a contraction in the September quarter 2021, when economic activity was affected by the Delta outbreak."
Domestic demand drove growth
Household and government spending drove growth this quarter with total final consumption contributing 1.4 percentage points to GDP. Household spending rose 1.5 per cent with increases across a number of discretionary categories.
"Household consumption continued to drive growth this quarter. Following the easing of COVID-19 restrictions, household spending on Transport services, Hotels, cafes and restaurants, and Recreation and culture increased." Mr Crick said.
Demand from households was reflected in increased Gross Value Added (GVA) for Transport, postal and warehousing, Arts and recreation services, and Accommodation and food services.
Government consumption contributed to the rise in domestic demand with increased expenditure to support flood-affected regions in New South Wales and Queensland. The weather events during the quarter affected supply chains and dampened activity in industries such as Construction and Mining. The fall in mining production led to a decline in exports of mining commodities resulting in a 0.9 per cent drop in exports.
Household saving ratio falls
The household saving to income ratio fell from 13.4 per cent to 11.4 per cent as the increase in household spending outpaced growth in household income. Household gross disposable income rose 0.6 per cent in the March quarter driven by a rise in compensation of employees reflecting robust employment and labour cost pressures. Households received $2.8 billion in non-life insurance claims related to floods, adding 0.8 percentage points to the saving-to-income ratio.
"The 11.4 per cent household saving ratio was the lowest since the start of the COVID-19 pandemic, but remains above pre-pandemic levels," Mr Crick said.
Detraction from strong imports were partly offset in inventories
Imports of goods and services rose 8.1 per cent and detracted 1.5 percentage points from GDP. This was the largest rise since December 2009, driven by imports of consumption and intermediate goods. Businesses built up inventories to stock levels closer to pre-pandemic levels as supply constraints on imports eased in the quarter. Change in inventories contributed 1.0 percentage point to GDP and partly offset the detraction from imports.
Rise in commodity prices led to high Mining profits
The terms of trade rose 5.9 per cent with export and import price both up strongly. High demand for Australia’s mining and rural commodities amidst supply constraints in other producing nations and global uncertainty contributed to the rise in export prices. Mining operating surplus rose 14.7 per cent to reach $69 billion, reflecting strong commodity prices across coal, LNG and iron ore.
- A breakdown of key information from this and other economic releases can be found in '12 things that happened in the Australian economy in March quarter 2022'.
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