ANALYSIS


AUSTRALIAN ECONOMY GROWS BY 0.8%

Australian gross domestic product (GDP) grew by 0.8% in the June quarter 2017, following a 0.3% rise in the March quarter. The economy grew 1.8% through the year.

HOUSEHOLD FINAL CONSUMPTION EXPENDITURE INCREASES

Household final consumption expenditure (HFCE) grew 0.7% during the June quarter 2017, contributing 0.4 percentage points to GDP growth. Growth in HFCE was led by food (1.5%), insurance and other financial services (1.3%) and rent and other dwelling services (0.5%), while electricity, gas and other fuel (-3.7%) and purchase of vehicles (-1.1%) detracted from HFCE growth. HFCE grew 2.6% through the year.

HOUSEHOLD CONSUMPTION OUTSTRIPS GROWTH IN DISPOSABLE INCOME

The household saving ratio is 4.6% in seasonally adjusted terms in the June quarter 2017, down from 5.3% in the March quarter 2017. Over the past five quarters gross disposable income has grown at an average of 0.5%. This is consistently lower than the growth being observed in HFCE.

PRIVATE NON-FINANCIAL CORPORATIONS PROFIT DECLINES WITH TERMS OF TRADE

The terms of trade decreased 6.0% in the June quarter following an increase of 5.6% in the March quarter 2017. Private non-financial corporations (PNFC) gross operating surplus (GOS) is heavily impacted by the terms of trade. PNFC GOS decreased 4.3% driven by a decrease in Mining GOS in the June quarter following an increase of 7.9% in the March quarter.

INCREASES IN AGRICULTURAL PRODUCTION DRIVES STRENGTH IN RURAL EXPORTS

Agriculture, Forestry and Fishing gross value added (GVA) has risen 22.6% through the year on the back of strength in grains and livestock, this has contributed 0.5 percentage points to through the year GDP growth. This increase is reflected in 18.7% through the year growth in the volume of rural exports.

GROWTH IN DWELLING INVESTMENT DIVERGES BETWEEN STATES

Dwellings investment increased by a modest 0.2% in the June quarter, following a 3.7% fall in the March quarter. The graph below shows that investment in New South Wales and Victoria continues at elevated levels, in line with population growth. Activity in Queensland has plateaued, while activity in Western Australia has fallen away significantly.

SHARP DECLINE IN WHOLESALE TRADE INVENTORIES

Wholesale Trade inventories declined $1,411m in the June quarter. The quarterly result was driven by a rundown in grain inventories after strong harvests led to a build up in previous quarters. There is still a positive build up in Wholesale Trade inventories over the past year.