Australian economic growth has picked up pace, growing by 3.4 per cent in the year to the end of June, driven by increased consumer demand.
It is a step up from the 3.1 per cent year-on-year GDP growth in the March quarter and above the 3 per cent the Reserve Bank had forecast.
“Growth in domestic demand accounts for over half the growth in GDP, and reflected strength in household expenditure,” the Australian Bureau of Statistics’ chief economist, Bruce Hockman, said in announcing the positive results.
Domestic demand increased 0.6 per cent for the quarter, driven by a 0.7 per cent growth in household consumption, with increased expenditure on both discretionary and non-discretionary goods and services.
Releasing his first national accounts on Wednesday, Treasurer Josh Frydenberg said the rate of growth was the strongest since September 2012 – the height of the mining boom.
“The economy is strong, the fundamentals are good and momentum has continued and these are an encouraging set of numbers,” he said.
“What we are seeing with employment across the economy is real confidence in a vast range of sectors.”
Shrinking household savings was another contributor to the growth. Investment in new dwellings increased 3.6 percent for the quarter, with strength observed in Victoria and South Australia. This strength was reflected in the Construction industry, which grew 1.9 per cent for the quarter.
Moderate growth in household disposable income coupled with strength in household consumption resulted in a decline in the household saving ratio to 1.0 per cent, recording its lowest rate since December 2007.
Compensation of employees (COE) grew 0.7 per cent for the quarter due to a rises in the number of wage and salary earners and wage rates. COE growth was prominent in the Health Care and Social Assistance industry.