Australia’s economic growth remained sluggish in the three months through September with gross domestic product increasing only 0.3% from the prior quarter, below analyst expectation of a 0.5% growth.
Compared to a year earlier, the economy grew 0.8%, against a forecast of 1.1%. The latest figures were released by the Australian Bureau of Statistics on Wednesday.
“The Australian economy grew for the twelfth quarter in a row, but has continued to slow since September 2023,” cautioned Katherine Keenan, ABS head of national accounts.
The Reserve Bank of Australia’s (RBA) latest forecasts had GDP expanding at an annual pace of 1.5% by the end of 2024. Still, that is unlikely enough for it to cut the cash rate which is currently at a 13-year high of 4.35%.
Recent data released by the ABS showed that the core inflation figure – the measure which smooths out volatile items – rose from 3.2% to 3.5%, and remains outside of the RBA’s 2-3% target range.
The GDP growth this quarter was driven by public sector expenditure with government consumption and public investment both contributing to growth.
It noted that GDP per capita fell by 0.3%, dipping for the seventh straight quarter.
Public investment rose 6.3% in the September quarter, while government spending climbed 1.4%. “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,” said Kennan.
Household spending was flat in the September quarter following a fall of 0.3% in June. The household saving ratio rose to 3.2% in the September quarter. This saw gross disposable income rising 1.5%, which outpaced the rise in nominal household spending of 0.6%.
“The introduction of stage 3 tax cuts saw a fall in the amount of income tax paid by households of 3.8% in the September quarter. This contributed to a rise in household gross disposable income,” said Keenan.
The growth in gross disposable income was driven by a rise in income received by households. Compensation of employees (+1.3%), and interest received (+3.6%) both increased.
Last month research company Roy Morgan predicted Australians would spend nearly $70 billion in the six weeks leading to Christmas 2024. If this occurs, it would represent a 2.7 per cent year-on-year increase.
