Public sector spending drives growth as household consumption stagnates
Australia’s gross domestic product (GDP) grew by 0.3% in the September quarter and by 0.8% over the year to September, figures released by the Australian Bureau of Statistics (ABS) have shown.
Katherine Keenan, ABS head of national accounts, said the economy continued to expand for the 12th consecutive quarter but noted that growth had slowed compared to September 2023.
Australia’s GDP per capita fell 0.3% in the September quarter, marking the seventh consecutive quarterly decline, as population growth outpaced economic output.
The quarter’s GDP growth was driven by public sector spending, with government consumption and public investment making significant contributions. Public investment rose 6.3%, marking a record high following three consecutive quarterly declines.
General government investment increased by 6%, supported by spending on defence equipment, hospitals, and roads. State and local public corporations’ investment grew 8.8%, driven by road and renewable energy projects.
The latest ABS figures also showed a 1.4% increase in overall government spending, bolstered by energy cost relief measures such as the Energy Bill Relief Fund, which provided rebates to households.
Household spending was unchanged in the September quarter, following a 0.3% decline in June. Electricity and gas spending dropped sharply due to the energy bill relief rebates, which shifted expenditure from households to the government in national accounts terms.
“The rebate-driven fall in household electricity spending was offset by growth in other areas, including clothing and footwear, which benefited from unseasonably warm weather, and essential services like rent, health, and education,” Keenan said.
Spending by Australians travelling overseas also boosted domestic tourism categories such as hotels, cafes, and restaurants.
The household saving ratio rose to 3.2%, up from 3% in the June quarter. Gross disposable income grew by 1.5%, outpacing the 0.6% increase in nominal household spending.
Income growth was driven by a 1.3% rise in employee compensation and a 3.6% increase in interest received, reflecting higher savings and offset account balances. These gains were partially offset by a 3.4% rise in interest payments on mortgages.
“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,” Keenan said. “This contributed to a rise in household gross disposable income.”
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