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Australia’s economic growth rises 3.4 % in June quarter, exceeding expectations

Australia’s Q2 Growth Domestic Product (GPD) report released on Wednesday shows the Australian economy has grown 0.9% in the June Quarter, up 3.4% from last year.

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Economy

The real GDP came in at 0.90% exceeding expectations of 0.70%, according to the ABS. The jump shows positve growth for the Australian economy – the best in six years.

Chief Economist for the ABS, Bruce Hockman, said 'Growth in domestic demand accounts for over half the growth in GDP, and reflected strength in household expenditure.' In the March quarter, the real GDP grew by 1%, the fastest increase since 2011.

According to the ABS, domestic demand increased 0.6 % for the June quarter, driven by a 0.7 % growth in household consumption, with increased expenditure on both discretionary and non-discretionary goods and services.

Strengths

  • General government final consumption expenditure went up 1.0 %, while public investment remained high.
  • Investment in new dwellings increased 3.6 % with strength observed in Victoria and South Australia, reflecting a 1.9% boost for the construction industry
  • Compensation of employees (COE) grew 0.7 % for the June quarter, due to rises in the number of wage and salary earners and wage rates.

Weaknesses

  • Household disposable income and strength in household consumption dropped 1.0% in the household saving ratio - its lowest rate since December 2007.

The Australian dollar rose slightly upon the news, rising above 0.7215 from 0.7190.

The numbers show Australia’s economy is growing rapidly, with the jump in the June quartre marking the 27th year without recession.

Economists say they're impressed with the result, particularly with the pace of Australia’s changing political leadership.

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