CANBERRA, ACT, June 4 -- The Treasurer of Australia issued the following media release:
Today's National Accounts show that our economy continues to grow in the face of substantial economic headwinds at home and abroad.
While overall growth in the Australian economy remains subdued, the private sector recovery we have planned and prepared for is gradually taking hold.
With all the uncertainty in the world, any growth is a decent outcome.
Lower public demand, combined with global economic uncertainty and the impact of natural disasters, meant growth was weaker than expected.
Even with these challenges, we are seeing private demand and incomes continuing to recover.
Today's numbers show the private sector stepping up as public demand steps back.
The economy grew 0.2percent in the March quarter, leaving annual growth steady at 1.3percent.
While growth in the quarter was weaker than expected, the Australian economy remains one of the strongest in the world.
No major advanced economy has achieved what we have, with unemployment in the low 4s, inflation below 2.5percent and continuous growth for threeyears.
Public demand has played a role in keeping the economy from going backwards over the past twoyears, but we know strong and sustainable economic growth is driven by the private sector.
Our plan has always focused on restoring the private sector to its rightful place as the main driver of growth in our economy.
While the private sector‑led recovery was always going to be gradual, today's data shows encouraging signs it is continuing.
Private demand grew 0.5percent, contributing 0.3 of a percentage point to growth in the quarter.
The contribution from private demand was greater than overall GDP growth.
Growth in private demand was broad based, with consumption, new business investment and dwelling investment all growing in the quarter.
These three components have grown at the same time in only around 1 in every 3 quarters since records began.
Consumption grew 0.4percent in the quarter, contributing 0.2 of a percentage point to growth.
Consumption growth was weighed down by the impact of natural disasters and households continuing to exercise caution in spending, with the saving ratio rising to 5.2percent - the highest in more than two and a half years.
While consumption growth was modest in the quarter, it was encouraging to see solid growth in real incomes per capita.
Getting real incomes growing again has been central to our Government's economic strategy after they were going backwards 1.7percent when we came to office.
Real incomes per capita grew 1.1percent in the quarter and are up 1.7percent through the year. This is the strongest quarterly growth rate for real incomes in more than threeyears.
Growth in real incomes reflects a combination of moderating inflation, solid wage and employment growth, the Government's tax cuts for every taxpayer and lower interest rates. There was also some support from insurance claims related to weather events.
In the second half of last year real incomes in Australia grew faster than the OECD average and almost twice the G7 average, and we have now recorded a third consecutive quarter of real income growth.
Private investment was an important contributor to growth in the quarter, driven by dwelling investment and new business investment.
Dwelling investment grew by a solid 2.6percent in the quarter, to be 5.6percent higher through the year, well above average quarterly growth over the past tenyears of just 0.2percent. This is the type of investment the Government's $43billion Homes for Australia Plan will continue to encourage as we deliver on our housing agenda.
New business investment rose 0.4percent in the quarter, driven by construction investment, taking the level of business investment to a 12year high.
Since we came to office, new business investment has grown by an annualised average of 4.4percent, compared to an average decline of 1.3percent under our predecessors.
Public demand fell 0.5percent in the quarter, detracting 0.1 of a percentage point from growth. The moderation in public demand growth means that public demand as a share of GDP fell in the quarter by 0.3 of a percentage point.
The quarterly fall in public demand was driven by a wrap up of a number of large projects in the previous quarter and partly by a moderation in growth of NDIS spending due to the Government's reforms.
Net exports detracted 0.1 of a percentage point from growth, reflecting the impact of natural disasters and subdued global economic conditions.
Extreme weather events had an impact on mining, tourism and shipping activities in the quarter. Coal export volumes declined by 6.4percent in the quarter, weighing down overall non‑rural goods exports, which fell 2.3percent.
Despite all the challenges coming at us, Australians are earning more and keeping more of what they earn under Labor.
Compensation of employees grew by 1.5percent in the quarter, to be 6.5percent through the year. This has seen the wage share of income rise to 53.7percent from the below 50percent before we came to office.
Wages in future quarters will be supported by the Fair Work Commission's welcome decision to award a real wage increase for award workers.
Our tax cuts for every taxpayer have contributed to another fall in tax as a share of income. Income tax as a share of income was 15.5percent in the quarter, down from 16.3percent in the quarter before our tax cuts started rolling out.
The substantial and sustained progress we've made on inflation was confirmed again in today's data, with the National Accounts consumption deflator moderating to 3.3percent in annual terms, the lowest in threeyears.
The first of the interest rate cuts saw mortgage interest costs fall in the quarter. As the rate cuts flow through to household mortgages, we expect them to play more of a role in boosting real incomes in future quarters.
Under Labor, inflation is down, real wages and living standards are rising, unemployment is low, interest rates are falling and the economy is continuing to grow.
All of this progress Australians have made together means that we are well placed and well prepared for the heightened uncertainty and volatility in the global economy in the period ahead.
Disclaimer: Curated by HT Syndication.
