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HOUSEHOLD CONSUMPTION INCREASED FOR THE QUARTER
Household final consumption expenditure increased 0.3% in the September quarter 2018, with through the year growth moderating to 2.5%. Just over half of the components rose this quarter. The growth in household consumption was driven by spending on food, insurance and other financial services, transport services and health. There were falls in household spending for durable goods such as purchases of vehicles, furnishings and household equipment, and clothing and footwear.
CONTINUED STRENGTH IN GOVERNMENT EXPENDITURE
Government final consumption expenditure rose 0.5% in the September quarter 2018 and remains strong through the year at 4.8%. National non-defence (2.0%) was the main contributor to growth, due to increases in social benefits to households from continued government spending on disability, health and aged care services. State and local government expenditure decreased 0.5% driven by falls in non-employee expenses.
LOWER BUILD UP IN INVENTORIES HELD BY BUSINESS
Inventories held by business increased $47m in the September quarter 2018. This follows a much larger build up of inventories in the June quarter 2018 ($1.2b), and has detracted 0.3 percentage points from GDP. The rise this quarter was driven by a large increase in Retail Trade inventories, which was the largest build-up since December 2015. This increase was offset by a reduction in inventories for Wholesale Trade, Manufacturing and Mining. Inventories held by Wholesale Trade were drawn down in the quarter, driven by grocery, liquor and tobacco and other goods wholesaling.
NET EXPORTS CONTRIBUTES TO GDP GROWTH
Net exports contributed 0.3 percentage points to GDP in the September quarter 2018. This was driven by a fall in imports of 1.5%. The fall in imports was due to decreases in both consumption goods (-2.5%) and capital goods (-2.2%). Exports of goods and services grew 0.1%, and made no contribution to GDP. The weak growth was due to falls in iron ore exports offsetting the increase in exports of services (4.5%).
BROAD BASED GROWTH IN COMPENSATION OF EMPLOYEES
Compensation of employees (COE) grew by 1.0% in the September quarter 2018 driven by strength in the private sector. Through the year COE recorded growth of 4.3%, with Health Care and Social Assistance, Administrative and Support Services and Education and Training all contributing to growth.
HOUSEHOLD SAVING RATIO FALLS
The household saving ratio fell to 2.4% in the September quarter 2018 as household final consumption expenditure continued to outpace growth in household gross disposable income. Weak growth in gross disposable income was due to moderate growth in compensation of employees being partially offset by a fall in gross mixed income and a rise in household income tax payable.
GENERAL GOVERNMENT NET SAVING
General government net saving rose from $7.1 billion to $8.2 billion in September quarter 2018. This result is the largest positive net saving since March 2006 when it was at $9.2 billion. Growth in net saving was driven by an increase in gross disposable income due to individual income tax receipts, which was stronger than the rise in government final consumption expenditure.
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