The Australian economy performed slightly better than forecast in the June quarter, but it still showed weakness for both the three months and the 2023-24 financial year.
The Australian Bureau of Statistics reported that GDP rose by 0.2% from the March quarter, seasonally adjusted, and by an annual rate of 1%. It grew 1.5% over the year.
This was marginally stronger than the 0.1% estimate from many economists for quarter-on-quarter growth and aligned with most estimates for annual growth.
However, a key measure, GDP per capita, fell for the sixth consecutive quarter, declining by 0.4% as economic growth again failed to keep pace with population growth. It decreased by 1.0% over the year.
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," she added.
As we suggested, better trade and government financing activities supported GDP growth as household spending dipped and investment again fell.
The ABS stated that household spending fell by 0.2%, 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 several sporting, gambling, and music events (Taylor Swift’s concerts and the Australian Open tennis and one-day cricket finals)."
However, consumers did open their wallets in some areas, with a 4.0% rise in spending on furnishings and household equipment as households took advantage of end-of-year sales in May and June.
The ABS noted that this was partly offset by a 1.0% decline in food spending, with households spending less on groceries.
"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.
Government spending rose by 1.4%. "National non-defence spending drove 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 noted.
Investment fell for the third consecutive quarter, with total investment down by 0.1% in the June quarter.
In the private sector, new machinery and equipment investment fell by 1.6%, driven by reduced agriculture and retail investment. This was partly offset by ownership transfer costs, which rose by 3.9% due to strong activity in the property market.
Despite three quarters of decline, annual growth in total investment was a solid 4.1%, which was faster than the inflation rate for the financial year, around 3.9%.
Services exports rose by 5.6% in the June quarter following declines 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.
Looking at savings, the ABS reported that the household saving ratio was unchanged at 0.6% in the June quarter, as gross disposable income rose by 0.9%, outpacing a 0.7% rise in nominal household spending, which was equal to the 0.9% rise in the implicit domestic price deflator (a measure of inflation).
"The growth in gross disposable income was driven by a 1.0% rise in compensation of employees, which was partly offset by a 3.1% increase in income tax payable."
Over the year, the saving ratio was 0.9%—the lowest since 2006-07, with nominal household spending up by 5.9%, outpacing the 4.1% growth in gross disposable income.
