Australian national accounts, March quarter 2024
18:05 June 05 2024
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Economy continues to limp along. Demand subdued, consumer a touch better but savings depleted. Q1 domestic demand: 0.2%qtr, 2.3%yr. Q1 real GDP: 0.1%qtr, 1.1%yr.
Read full report 'Australian national accounts, March quarter 2024' (PDF 281KB) The Australian economy continued to limp along in the March quarter, with GDP rising just 0.1%qtr and 1.1%yr. The quarterly result and the mix were both broadly in line with expectations, albeit with some modest surprises and significant revisions around the consumer. The annual pace of growth is well below trend and the slowest outside of recessions and the major shocks of the pandemic and the GFC. It is particularly weak given the current strong pace of population growth, running at 2.4%yr. Australia has now recorded four consecutive quarters of declining per capita GDP. Domestic demand edged 0.2% higher over the quarter with solid growth in public demand but near-flat private demand. The main surprise was a larger than expected contribution from household consumption, up 0.4%qtr although this was offset by a larger than expected drag from private new non-dwelling construction. Some of this reflects a temporary boost from one-off events – the Taylor Swift concerts and Formula 1 look to have added about 0.1ppt to consumption in the quarter. Significant upward revisions to historical estimates of spending suggest consumers may be more cautious over the year ahead. These revisions relate to estimates of Australian tourism spending abroad. The total mark-up adds just over $22bn to the last five quarters of spending estimates and lifts the annual growth profile of total consumer spending by about 1ppt. However, it also implies a much larger run-down in reserves carried over from the pandemic. Nearly half of this aggregate buffer now looks to be gone. That suggests households may be less inclined to spend and more inclined to rebuild savings buffers as their incomes recover. Meanwhile the recovery in incomes remains slow, real household disposable income flat in the quarter and up just 0.4%yr. The various headwinds to income – from the rising cost-of-living, higher interest rates and higher tax payments – are moderating but with only a muted recovery in incomes so far. Elsewhere: dwelling investment and business investment were both soft in the quarter, speaking to wider issues facing the construction sector; net exports were a large drag, again reflecting the surge in tourism-related imports; and inventories provided some offset, reversing a run-down last quarter. The update shows productivity and unit labour costs continuing to improve, but only very gradually. Hours worked tracked GDP in the quarter with labour productivity flat on a year ago (albeit still an improvement on declines). Growth in unit labour costs slowed from 6.6%yr to 5.8%yr. Looking ahead, the economy is expected to see some improvement as consumer headwinds continue to subside and policy provides more support as tax cuts and fiscal support measures impact from July and an eventual easing in interest rates comes through from November. The March quarter update will be a mixed result for the RBA, subdued growth indicating restrictive policy is aiding disinflation but the revised picture of the consumer throwing up some questions and the slow improvement in domestic cost drivers a little unsettling. Click on above PDF link for full report
2024 KangaNews Australian Investor research poll results
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