Economic activity increased 3.1% in December quarter

Australian Gross Domestic Product (GDP) rose 3.1 per cent in seasonally adjusted chain volume terms in the December quarter 2020, according to figures released by the Australian Bureau of Statistics (ABS) today.

Head of National Accounts at the ABS, Michael Smedes said: “The economy has continued to recover with activity increasing 3.1 per cent in the December quarter following the 3.4 per cent rise in September quarter. However, despite the two consecutive quarters of strong growth, economic activity remained 1.1 per cent lower than recorded in the 2019 December quarter." This is the first time in the over sixty year history of the National Accounts that GDP has grown by more than 3.0 per cent in two consecutive quarters.

Household spending increased 4.3 per cent as COVID-19 restrictions continued to ease. Victoria recorded the strongest increase in household spending after strict lockdown restrictions were lifted.

Mr Smedes added: “Despite growing at 10.4 per cent for the quarter, household spending in Victoria was 7.2 per cent below its pre-COVID level. Household spending for the rest of Australia, excluding Victoria, was 1.1 per cent lower than pre-COVID levels.” This release includes a spotlight article on insights into household consumption.

Private investment rose 3.9 per cent and contributed 0.7 percentage points to growth. There were rises across both housing and business investment with improved conditions which coincided with government initiatives, such as HomeBuilder and the expanded instant asset write-off.

Compensation of employees rose 1.5 per cent as employment and hours worked increased with underlying activity in the economy. Despite this, household income fell as non-labour income declined with a reduction in government support payments. The household saving to income ratio remained elevated at 12.0 per cent.

Favourable weather conditions contributed to a strong increase in agricultural production, reflected in a 26.8 per cent increase in Agriculture, Forestry and Fishing Gross Value Added. There were flow-on positive impacts to other industries along the supply chain, including Wholesale Trade and Transport, Postal and Warehousing, which rose 3.6 per cent and 6.1 per cent respectively. This release includes a spotlight article on insights into Australian industries.