Australia. GDP grows by 0.5pc for June quarter, 3.1pc for year
2014-09-03 11:29:06
Cries of weak economic growth are becoming harder to sustain after the Australian Bureau of Statistics announced Australia’s economy grew 3.1 per cent last financial year, faster than both government and the Reserve Bank of Australia forecast.
It was the second quarter in a row Australia’s economic growth surprised economists for its resilience, and will marginally reduce the likelihood of further official cuts in interest rates.
The value of economic output grew 0.5 per cent between March and June, the ABS said today, thanks to growth in household spending, a pick-up in home and non-dwelling construction and a surge in businesses’ inventories — normally taken as a sign of rising economic confidence on consumers’ propensity to spend.
Economists had expected slightly weaker growth of around 0.4 per cent over the quarter, while the government had pencilled 2.75 per cent in its May budget, and the RBA in August anticipated growth of 3 per cent.
New South Wales and Victoria enjoyed the fastest economic growth, of 3.6 per cent and 2.5 per cent respectively over the year.
Both states are enjoying home-building booms underpinned by rapid increases in capital city house prices.
The quarterly national accounts track the growth of Australia’s most important economic aggregates, such as exports, wages, profits, making adjustments for changes in prices to obtain a “real” estimate of national economic output.
The accounts also showed the terms of trade — the ratio of export to import prices — fell a further 4.1 per cent between March and June reflecting ongoing falls in the price of coal and especially iron ore — Australia’s number 1 exports.
While overall economic output grew, the slump export prices saw national income fall by 0.3 per cent over the quarter, making the headline results ambiguous for government tax receipts.
Australians continued to save more than 9 per cent of their disposable (after tax) income, extending the trend of more conservative saving exhibited since the GFC.
Wages, salaries (including compulsory superannuation contributions) rose 3.1 per cent over the year to equal a little over 50 per cent of the value of all income in the economy compared to 27 per cent for company profits.
Australia has relatively rapid population growth: GDP per capita grew only 0.1 per cent in the June quarter, one fifth as fast as overall output.