Australian national accounts, June quarter 2024

The Australian economy remains sluggish, with GDP rising just 0.2%qtr and 1.0%yr in the June quarter. The aggregate outcome was broadly in line with Westpac’s and the market’s expectations.

Click her fore the full report 'Australian national accounts, June quarter 2024 (PDF 712KB)'

The Australian economy remains sluggish, with GDP rising just 0.2%qtr and 1.0%yr in the June quarter. The aggregate outcome was broadly in line with Westpac’s and the market’s expectations.

The underlying mix provided the big surprise, with consumer spending falling 0.2%qtr – the largest quarterly decline since the GFC, excluding the COVID period. This is particularly weak given the backdrop of strong population growth, up another 0.6%qtr in Q2 (the second strongest quarterly jump in the population on record).

This protracted period of weakness in consumer spending is now clearly weighing more heavily on the business sector where investment increasing by just 0.1%qtr and 2.2%yr in Q2 – a step down from the 4.5%yr recorded in the March quarter. As a result, total private demand (consumer spending and business investment) was flat in Q2.

This weakness in private demand suggests there is a risk that the gradual recovery expected in the second half of 2024 is slower and/or weaker to pan out. This is a key uncertainty we have highlighted in the past.

The annual pace of growth is well below trend and the slowest since the early 1990s recession, outside of the pandemic period, and particularly weak in per capita terms given population growth running at 2.5%yr. Australia has now recorded six consecutive quarters of declining per capita GDP – the longest stretch on quarterly estimates going back to 1959.

Underlying cost pressures remain broadly unchanged, with a step down in average earnings growth offsetting the subdued labour productivity outcome. Unit labour costs (a key measure of domestic cost pressures) are now running at 1.8% in six-month annualised terms, broadly in line with the March quarter. This is lower than the average pace in 2019 when underlying inflation was below the RBA’s 2-3% target band.

The June quarter update will be a mixed result for the RBA, subdued growth indicating restrictive policy is aiding disinflation, the revised picture of the consumer suggesting it is weighing more heavily but the slow improvement in domestic cost drivers a little unsettling.

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Australian national accounts, June quarter 2024

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