Australia’s gross domestic product (GDP) grew by 0.4% in the March quarter 2019, following a 0.2% rise in the December quarter. The Australian economy grew 1.8% through the year, according to the ABS. This is well below the 2.75% trend average. The expenditure measure of GDP grew by only 0.2%, below expectations.
Trend GDP per capita was negative for the second quarter in a row.
Housing and the consumer spending eased as a result of a further tightening of lending standards and persistent weak wages growth. Plus the drought in NSW and surrounds added to the downside drivers.
Government final consumption expenditure rose 0.8% in the quarter and remains strong through the year at 5.1%. National non-defence (2.4%) was the main contributor to growth, due to increases in social benefits to households from continued government spending on disability and health services. State and local government expenditure increased 0.4% driven by rises in employee expenses.
Dwelling investment fell 2.5% in the quarter, falling 3.1% through the year. This fall follows significant falls in dwelling approvals. Prior to this, dwelling investment reached record levels in September quarter 2018.
Non-mining investment grew 2.0%, driven by broad based investment in new buildings, particularly offices and accommodation buildings. Mining investment continued to decline, falling 1.8% in the quarter.
Household final consumption expenditure increased 0.3%, with through the year growth moderating to 1.8%. Households reduced discretionary spending, in particular on recreation and culture, hospitality and furnishings and household equipment.
The household saving ratio rose to 2.8 with growth in household disposable income outpacing subdued growth in household spending. The growth in gross disposable income was primarily driven by continued growth in compensation of employees. Non-life insurance claims continued to contribute to household income following a significant rise in the December quarter. These insurance claims are related to recent natural disaster events, namely the Sydney hail storms in December quarter and Queensland floods in the March quarter.
