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

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Released
7/06/2023
Source
Australian National Accounts: National Income, Expenditure and Product, March 2023

The Australian Economy - March quarter 2023

  1. Our economy grew 0.2 per cent during the March quarter 2023, and 2.3 per cent compared to the same time last year. This was the sixth straight quarter of economic growth, though it was the weakest quarterly growth since the COVID-19 Delta lockdowns in September quarter 2021. GDP per capita fell 0.2 per cent.
  2. The labour market remained tight. The unemployment rate for the month of March was 3.5 per cent, a near 50-year low. More than 31,000 people found employment in that month.
  3. We downed tools over summer. Around 43 per cent of employees worked fewer hours than usual during January, because they were on leave.
  4. High inflation continued. The consumer price index rose 1.4 per cent during the March quarter 2023 and 7.0 per cent compared to last year. The main drivers of the quarterly consumer price increase were medical and hospital services, gas, holiday travel and accommodation.
  5. Inflation curbed our enthusiasm for shopping. Spending on discretionary items fell 1.0 per cent. Looking past the pandemic, this was the first fall in discretionary spending since September quarter 2019. Purchases of furniture and household equipment fell 2.4 per cent. Total household consumption grew a modest 0.2 per cent, the slowest quarterly growth since the Delta lockdowns. Retail sales fell 0.6 per cent during March quarter 2023.
  6. We saved less. Even though we held back on discretionary spending, households only saved 3.7 per cent of their income during the March quarter 2023. This was the lowest proportion of household income being saved since June quarter 2008. Interest paid on mortgages grew a further 11.5 per cent during the quarter. The amount of money spent servicing mortgages more than doubled in the past year.
  7. Our pay packets continued to grow in response to tight labour market conditions, though real wages continued to fall due to cost of living pressures. The wage price index rose 3.7 per cent compared to last year, the highest annual rise in more than a decade. Compensation of employees rose 2.4 per cent during the quarter.
  8. Taxes rose. Income taxes paid by individuals rose 3.3 per cent due to the strong labour market, while company tax rose 4.6 per cent. GST collection rose a modest 0.7 per cent as shoppers tightened their belts.
  9. Fewer new houses were built. Construction of new dwellings fell 1.3 per cent. Bottlenecks in labour and materials supplies began to ease though remained tight. Builders tackled a significant backlog of work still to be done. The average time taken to build a house rose to about nine months, up from about six months before the pandemic.
  10. Trade weighed on economic growth. Cars and mobile phone handsets drove our imports bill. Travel imports rose 7.1 per cent as more of us visited overseas destinations close to home. Exports of meat grew 36.9 per cent due to improved supply conditions, while travel exports rose 17.5 per cent as international students continued to return to our universities.
  11. Business investment was strong. Purchases of equipment, such as heavy vehicles and cotton-picking machinery, grew 6.0 per cent. Spending on infrastructure increased 3.1 per cent, driven by electricity and transport projects. The switch to renewable sources of energy continued, with a number of wind, solar and battery projects underway. Several large data centre and office projects also started.
  12. Bank margins narrowed. Financial corporations profits fell 0.2 per cent as competition for deposits increased.