Australian economy grew 0.2 per cent in June Quarter

Australian gross domestic product (GDP) rose 0.2 per cent (seasonally adjusted, chain volume measures) in the June quarter 2024 and by 1.5 per cent in the 2023-24 financial year, according to figures released by the Australian Bureau of Statistics (ABS) today. 

Katherine Keenan, ABS head of national accounts, said: “The Australian economy grew for the eleventh consecutive quarter, although growth slowed over the 2023-24 financial year. 

“Excluding the COVID-19 pandemic period, annual financial year economic growth was the lowest since 1991-92 - the year that included the gradual recovery from the 1991 recession."

GDP per capita was down for the sixth consecutive quarter, falling 0.4 per cent.

Household spending fell 0.2 per cent detracting 0.1 percentage points from GDP growth. 

“Spending on many discretionary categories fell in the June quarter. This followed a relatively strong result in the March quarter, which included a number of sporting, gambling and music events.

“The strongest detractor from growth was transport services, particularly reduced air travel. This was the first fall for this series since the September 2021 quarter,” Ms Keenan said.

Furnishings and household equipment rose (+4.0 per cent) as households took advantage of end-of-year sales. This was partly offset by food (-1.0 per cent) with households spending less on groceries.

Government spending rose by 1.4 per cent. 

“National non-defence spending drove the growth this quarter and grew for the seventh consecutive quarter. The rise in June was due to continued strength in social benefits programs for health services. State and local expenditure also contributed to growth with a rise in employee expenses,” Ms Keenan said.

Total investment fell 0.1 per cent in the June quarter. 

In the private sector, new machinery and equipment fell 1.6 per cent, driven by reduced agriculture and retail investment. This was partly offset by ownership transfer costs, which rose 3.9 per cent with strong activity in the property market.

Despite three quarters of falls, annual growth in total investment was 4.1 per cent.

Services exports rose 5.6 per cent in the June quarter following falls in the previous two quarters. This was led by education-related travel services particularly from a rise in average spending after two quarters of falls.

The change in inventories detracted 0.3 percentage points from growth in the June quarter following a build-up in March. 

The wholesale and manufacturing industries both experienced run downs in inventories. This reflected falls in some capital and intermediate goods import categories, including machinery and industrial equipment and processed industrial supplies.   

Both real and nominal GDP rose by 0.2 per cent in the June quarter, reflecting a flat GDP implicit price deflator (IPD). The flat IPD reflected falls in the terms of trade (-3.0 per cent), partially offset by the domestic final demand IPD (+0.9 per cent). 

The June quarter saw export prices fall 3.0 per cent - driven by bulk commodity prices, particularly coal and iron ore - while import prices were flat. 

This was the second consecutive quarter export prices declined due to falling commodity prices and was again reflected in the decline in mining profits. 

The growth in domestic prices was driven by continued strength in services and construction. 

The household saving ratio was unchanged at 0.6 per cent in the June quarter. Gross disposable income rose 0.9 per cent, outpacing a rise in nominal household spending of 0.7 per cent.

The growth in gross disposable income was driven by a rise in compensation of employees (+1.0 per cent), which was partly offset by an increase in income tax payable (+3.1 per cent).

In annual terms, the saving ratio was 0.9 per cent – the lowest since 2006-07, with nominal household spending (+5.9 per cent) outpacing growth in gross disposable income (+4.1 per cent). 

Over the year, compensation of employees and interest received by households both contributed to a growth in income, rising 7.3 per cent and 39.3 per cent respectively. 

This was partly offset by a rise in income tax payable (+10.9 per cent) and interest paid on dwellings (+36.1 per cent).