The Australian economy grew 0.9 per cent in seasonally adjusted chain volume terms in the June quarter 2018, according to figures released by the Australian Bureau of Statistics (ABS) today.
New dwelling investment continued to prop up the numbers, along with government and domestic consumption.
But the two key, and concerning trends are a significant fall in the households savings ratio (as they dip into them to support their spending), and the slower GDP per capita growth, which shows that much of the GDP momentum is simply population related. This is based in trend data.
Plus, real national disposable income per capita fell by 0.2% over the quarter though it was up 2.1% over the year. And average remuneration per employee rose by only 1.7% in the year to June, so remains underwater after adjusting for inflation (2.1%). Households remain under the gun.
Of course GDP is a really poor set of measures by which to assess the economy in any case….
Chief Economist for the ABS, Bruce Hockman, said: “Growth in domestic demand accounts for over half the growth in GDP, and reflected strength in household expenditure.”
Domestic demand increased 0.6 per cent for the quarter, driven by a 0.7 per cent growth in household consumption, with increased expenditure on both discretionary and non-discretionary goods and services.
General government final consumption expenditure increased 1.0 per cent in the June quarter. Public investment remained at elevated levels reflecting continued work on infrastructure projects across the nation.
Investment in new dwellings increased 3.6 percent for the quarter. with strength observed in Victoria and South Australia. This strength was reflected in the Construction industry, which grew 1.9 per cent for the quarter.
Compensation of employees (COE) grew 0.7 per cent for the quarter due to a rises in the number of wage and salary earners and wage rates. COE growth was prominent in the Health Care and Social Assistance industry.
Moderate growth in household disposable income coupled with strength in household consumption resulted in a decline in the household saving ratio to 1.0 per cent, recording its lowest rate since December 2007.
