Australian Economy Grows 0.6% in December Quarter

Australian gross domestic product (GDP) rose 0.6 per cent in the December quarter 2024 and 1.3 per cent through the year (seasonally adjusted, chain volume measure), according to figures released today by the Australian Bureau of Statistics (ABS).

Katherine Keenan, ABS head of national accounts, said: 'Modest growth was seen broadly across the economy this quarter. Both public and private spending contributed to the growth, supported by a rise in exports of goods and services.'

GDP per capita grew 0.1 per cent this quarter following seven consecutive quarters of falls.

'Economic growth picked up from the December quarter 2023 through to the December quarter 2024. GDP growth was up 1.3 per cent over this time,' Ms Keenan said.

Household spending was up 0.4 per cent in the December quarter after a flat result in the September quarter.

Spending on essentials such as rent and health continued to be one of the highest contributors to household spending growth. Electricity rebates continued this quarter, which kept household spending on electricity, gas and other fuels down.

'Household discretionary spending rose as people made the most of retail sales events and increased spending on hospitality as they enjoyed music and sporting events,' Ms Keenan said.

Growth in government spending moderated to 0.7 per cent in the December quarter following larger rises in previous quarters.

More spending on essential services including health, education and policing by state and territory governments drove the growth this quarter. Commonwealth government expenditure rose, with increased expenses associated with defence exercises, the pharmaceutical benefits scheme, and aged care.

"Private investment rose 0.3 per cent in the December quarter. Investment in new engineering, construction of electricity generation and distribution projects, and mining investment drove the growth,' Ms Keenan said.

Private investment in dwellings, however, fell 0.4 per cent as price and labour pressures continued to weigh on the pipeline of work, particularly for houses and alterations and additions.

Public investment rose 1.8 per cent.

Investment by state and territory governments in public transport, roads, water and renewable electricity infrastructure rose. Work carried out on Commonwealth projects also grew, including for telecommunications and power generation.

Trade in services contributed to GDP growth, driven by the rise in exports of services associated with the use of intellectual property services and other business services.

Exports of travel services also increased with overseas travellers benefiting from the depreciation of the Australian dollar against the US dollar. A fall in the import of travel services also contributed to the positive movement in net trade as Australians opted for cheaper and shorter holidays.

Exports of goods was flat as the growth in rural goods and non-monetary gold was offset by falls in metal ores and minerals driven by iron ore exports.

Nominal GDP rose by 1.6 per cent in the December quarter, reflecting a 1.0 per cent rise in the GDP implicit price deflator (IPD). The rise in the GDP IPD reflected the 0.8 per cent rise in the domestic final demand IPD.

Terms of trade contributed to the GDP IPD, as the rise in import prices from the depreciation of the Australian dollar was outpaced by higher export prices. The growth in export prices was led by a rebound in mineral ore prices and higher LNG and rural goods prices, with strong international demand for these Australian goods.

The household savings ratio rose modestly to 3.8 per cent in the December quarter, up from 3.6 per cent in the September quarter. Gross disposable income of households grew as income received rose and was only partially offset by an increase in income payable.

The rise in income received was driven by higher earnings from compensation of employees, household income from dwellings and interest received. Lower dividends received by households partially offset the rise.

There was also offsetting growth in income payable, led by a rise in income tax and interest paid on dwellings.