12 things that happened in the Australian economy during the last quarter

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Released
1/03/2023
Source
Australian National Accounts: National Income, Expenditure and Product, December 2022

The Australian Economy - December quarter 2022

  1. Our economy grew 0.5 per cent during the December quarter 2022, and 2.7 per cent compared to last year. This was the fifth consecutive quarter of growth since the COVID-19 Delta variant lockdowns.
  2. International trade drove the increase in growth. Exports grew 1.1 per cent while imports fell 4.3 per cent.
  3. Price pressures continued. Consumer prices rose 1.9 per cent during the December quarter 2022 and 7.8 per cent compared to last year. The annual increase in inflation was the highest since 1990. The drivers of the quarterly consumer price increase were holiday travel, accommodation, and electricity.
  4. We tightened our belts on discretionary goods. Consumers were more cautious with their purchases of discretionary goods but spending on services remained robust, growing 1.2 per cent during the quarter, though the pace of growth slowed. Overall, household consumption rose 0.3 per cent during the quarter, which was more subdued than in recent quarters. Retail sales fell 3.9 per cent in the month of December following 11 consecutive monthly rises.
  5. We continued to eat into our savings buffer. Households only saved 4.5 per cent of their income during the December quarter 2022, down from 7.1 per cent in the September quarter 2022 and 6.8 per cent in the pre-pandemic December quarter 2019. Interest paid on mortgages grew 23.0 per cent during the quarter, following a 36.1 per cent rise in the September quarter.
  6. Wage growth responded to tight labour market conditions and higher inflation. Compensation of employees rose 2.1 per cent. The private sector wage price index rose 0.8 per cent in the December quarter 2022. Compared to a year ago, private sector wages rose 3.6 per cent, the highest annual rate of growth since September quarter 2012. The unemployment rate for the month of December was 3.5 per cent.
  7. Taxes rose. Wage growth, combined with a tight labour market and increased investment returns saw income taxes paid by individuals increase 7.4 per cent during the quarter. Excise taxes grew 34.2 per cent as fuel excise relief ended. Total taxes collected by all levels of government rose 5.0 per cent during the quarter.
  8. Investment in new dwellings increased 1.4 per cent, but was offset by a 4.2 per cent decline in alterations and additions as the effects of HomeBuilder continued to wane. Investment by businesses in infrastructure and machinery fell during the December quarter.
  9. Mining production grew for the third quarter in a row on the back of strength in iron ore extraction, which grew 4.8 per cent. The domestic aviation industry continued its recovery, flying 4.8 per cent higher during the quarter, but is still only at about one-third of its pre-pandemic level. Reduced customer orders contributed to the fall in domestic manufacturing activity (down 1.8 per cent). 
  10. Travel services and coal drove our exports. Tourism and returning international students contributed to a 18.9 per cent increase in travel service exports. In contrast, imports of travel services fell 6.2 per cent as we travelled to closer and more affordable destinations. Coal exports grew 8.2 per cent following a sharp fall in the September quarter. Imports of goods fell 3.8 per cent, led by capital goods, as well as food, beverages and tobacco products.
  11. Our current account recorded a surplus, reflecting both an increase in the trade surplus and a narrowed income deficit. Our trade surplus was $40.9 billion, the second highest on record.
  12. Labour productivity slumped. GDP per hour worked fell 3.5 per cent through the year, the weakest on record as the distortionary impacts of COVID-19 on workforce composition unwound. Labour productivity over the last three years remained up 0.7 per cent.