Economic activity increased 0.6 per cent in September quarter8 December 2022
Australian Gross Domestic Product (GDP) rose 0.6% in seasonally adjusted chain volume terms in the September quarter 2022 and by 5.9% through the year, according to figures released by the Australian Bureau of Statistics (ABS) today.
Sean Crick, ABS head of National Accounts, said increased household spending once again drove GDP growth.
“The September quarter was the fourth consecutive quarter of economic growth, following a contraction in the September quarter 2021, which was impacted by the COVID-19 Delta outbreak,” he said.
Household spending continues to drive growth
Household spending rose 1.1 per cent for the quarter, contributing 0.6 percentage points to GDP. Growth was driven by spending on Hotels, cafes and restaurants (up 5.5 per cent), Transport services (up 13.9 per cent) and Purchase of vehicles (up 10.1 per cent).
“Households continued to increase spending on domestic and international travel as COVID-19 travel restrictions continued to ease. Spending on new vehicle purchases increased as international supply chain constraints eased, enabling an increase in vehicle imports,” Mr Crick said.
Spending on Hotels, cafes and restaurants has exceeded pre-pandemic levels for the past two quarters.
Compensation of employees growth the strongest since December 2006
Compensation of employees increased 3.2 per cent, the strongest rise since December quarter 2006. Tight labour market conditions, with the unemployment rate being at a multi-decade low, and job vacancies at high levels, were key to the rise. The Fair Work Commission’s 2021-22 minimum wage decision, and the increase in the superannuation guarantee (10.0 per cent to 10.5 per cent from 1 July 2022), also contributed to this growth.
Household saving ratio falls
The household saving to income ratio fell for the fourth consecutive quarter (from 8.3 per cent to 6.9 per cent) as increases in household spending outpaced household income growth. This was despite a large increase in compensation of employees.
“The household savings ratio continued to decline this quarter, moving towards pre COVID-19 pandemic levels. Higher levels of spending and increases in interest payable on dwellings detracted from household saving compared to the June quarter,” Mr Crick said.
Dwelling construction rebounds while Ownership transfer costs fall
New and used dwelling construction rebounded in the September quarter, rising 3.4 per cent as supply chain and labour constraints started to ease. However, there remains a large pipeline of dwelling construction. This can be attributed in part to incentives offered during the pandemic resulting in a backlog of work, and reduced building activity due to COVID-19 restrictions, labour constraints, and supply chain issues.
Ownership transfer costs fell 11.2 per cent as the property market eased in the September quarter. Rising interest rates and falling property prices resulted in declining house sales and auction clearance rates. Despite falling for four consecutive quarters, ownership transfer costs remained above pre-pandemic levels.
Increase in Exports offset by strong Imports growth
Net trade detracted 0.2 percentage points from GDP, with a 2.7 per cent increase in exports offset by a 3.9 per cent rise in imports.
Exports rose for the second consecutive quarter, driven by both goods and services exports. Rural goods (up 9.8 per cent) was the main contributor to goods exports, with increases in cotton and cereals. Mineral ores increased strongly but this was offset by falls in both coal and other mineral fuels exports. Exports of travel services grew 18.6 per cent, as International Education and Tourism continued to rebound after the re-opening of international borders, but was still approximately 50 per cent below its pre-pandemic level.
Imports rose strongly, driven by Travel services imports (up 58.0 per cent), as Australians travelled abroad. Imports of travel services has been proportionally stronger than exports, with current levels recovering to approximately 56 per cent of those observed before the pandemic. Increases in the imports of goods were driven by fuel and motor vehicles.
Weaker commodity prices drive falls in Mining profits and Terms of trade
The terms of trade fell 6.6 per cent, the largest fall since June quarter 2009, as import prices increased and export prices fell. Weaker demand for some mining commodities, particularly iron ore, drove export prices down. Falling prices drove a 7.1 per cent fall in Mining operating surplus in September to $78 billion.