Australian economy grew 0.3 per cent in September Quarter

Australian gross domestic product (GDP) rose 0.3 per cent in the September quarter 2024 and by 0.8 per cent since September 2023 (seasonally adjusted, chain volume measure), 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 twelfth quarter in a row, but has continued to slow since September 2023.” 

The strength this quarter was driven by public sector expenditure with Government consumption and public investment both contributing to growth. 

GDP per capita fell by 0.3 per cent, falling for the seventh straight quarter.

Public investment rose 6.3 per cent in the September quarter. 

General government investment rose 6.0 per cent driven by defence equipment imports and investment in hospitals and roads. State and local public corporations investment rose 8.8 per cent due to investment in roads and renewable energy.

“The rise in public investment in the September quarter followed three consecutive quarterly falls. The level of investment this quarter was the largest on record, the previous record was in September 2023,” Ms Keenan said.

Government spending rose by 1.4 per cent. 

“Social benefits paid to households increased this quarter as households received energy cost relief rebates, including the Energy Bill Relief Fund. At the Commonwealth level growth in social benefits to households was lower, including NDIS and Aged care, compared to recent quarters,” Ms Keenan said.

Household spending was flat in the September quarter following a fall of 0.3 per cent in June. 

The largest detractor from growth was for electricity and gas spending due to the implementation of the energy bill relief rebates. These rebates are treated as a shift from household to government expenditure in the national accounts.

“The rebate-driven fall in household electricity spending was offset by growth in other categories. Clothing and footwear rose in response to unseasonably warm weather and essential spending grew moderately with continued growth in rent, health and education services,” Ms Keenan said.

Spending by Australian travellers overseas also contributed to growth in tourism categories like hotels, cafes and restaurants, and recreation and culture.

Net trade contributed 0.1 percentage points (ppts) to GDP growth as exports grew 0.2 per cent and imports fell 0.3 per cent this quarter.

Exports of goods rose 0.9 per cent, driven by non-rural goods due to more overseas demand for coal. Imports of goods fell 1.5 per cent, as consumption goods fell including fewer motor vehicle imports. 

The rise in non-rural goods exports and the fall in consumption goods imports resulted in a drawdown of inventories. Changes in inventories fell $712m in September following a $2.0b build up in June, which resulted in a 0.4 ppt detraction from GDP growth this quarter. 

Trade in services detracted from growth as services exports fell 3.6 per cent. Education related travel was the main driver. Services imports rose 3.0 per cent, driven by travel services as Australians travelled to distant destinations like Europe and spent more time away. 

Nominal GDP rose by 0.4 per cent in the September quarter, reflecting a 0.1 per cent rise in the GDP implicit price deflator (IPD). The rise in the GDP IPD included a 0.7 per cent rise in the domestic final demand IPD, partially offset by the terms of trade (-2.5 per cent). The terms of trade have now fallen for three quarters in a row.

Export prices fell 2.6 per cent in September, as global demand for bulk commodities continued to slow. Import prices also fell led by goods imports due to reduced fuels and lubricants prices. 

“The quarterly growth in domestic prices was the lowest observed since March 2021. The growth this quarter reflected softening goods prices in the economy alongside more resilient services prices reflecting high demand for labour and costs of essential services such as rent, education and health,” Ms Keenan said. 

The household saving ratio rose to 3.2 per cent in the September quarter. This saw gross disposable income rising 1.5 per cent, which outpaced the rise in nominal household spending of 0.6 per cent.

The growth in gross disposable income was driven by a rise in income received by households. Compensation of employees (+1.3 per cent), and interest received (+3.6 per cent) both increased. The growth in interest received reflected rises in the balances of saving and offset accounts. These increases were partly offset by a higher interest paid on dwellings, which rose 3.4 per cent.

“The introduction of stage 3 tax cuts saw a fall in the amount of income tax paid by households of 3.8 per cent in the September quarter. This contributed to a rise in household gross disposable income,” Ms Keenan said.