Australia’s economy outperformed growth expectations last quarter, it has been revealed, with the good news for SMEs being that this growth was largely driven by domestic demand.
According to the Australian Bureau of Statistics (ABS), the nation’s economy grew by 0.9 per cent in the June 2018 quarter. That pushed the annual growth rate up to 3.4 per cent.
“Growth in domestic demand accounts for over half the growth in GDP, and reflected strength in household expenditure,” ABS chief economist Bruce Hockman said in announcing the positive results.
Both discretionary and non-discretionary goods and services enjoyed an uptick, boosting household consumption by 0.7 per cent.
New dwelling investment also picked up pace, rising by 3.6 per cent in the quarter – led by strength in South Australia and Victoria.
Adam Carr, chief economist at the Australian Chamber of Commerce and Industry (ACCI), said the figures easily beat expectations of 0.7 per cent growth for the quarter and just 2.8 per cent for the year.
“This is a great result and the best annual growth we’ve seen in nearly six years,” he said.
“The economy’s trajectory is clear – it’s growing well above its potential pace and getting stronger. It’s particularly positive that we are seeing a broadening in growth.
“The acceleration in private sector activity has been particularly rapid and that bodes well for job creation and wage growth if it's sustained.
“In fact, today’s data is the best indication yet that labour market tightening will persist and that the recent upturn in wage growth will continue – that’s clearly good news for families, for business and for the economy more broadly.”
The downside to the figures was that Australian households are saving less now than they have in more than a decade.
“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,” the ABS noted.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.