Today's national accounts show that our economy continued to grow in the June quarter.
Our economy remains strong.
Its fundamentals remain sound.
And once again it has proven its remarkable resilience.
Today's number should give Australians confidence that our economy will rebound strongly once restrictions ease.
Real GDP grew by 0.7 per cent in the June quarter, to be 9.6 per cent higher through the year – the strongest through the year rate on record.
Growth was stronger than market expectations and ahead of what was forecast at Budget.
Australia’s economy is now 1.6 per cent above its pre-pandemic level with our recovery continuing to lead the pack ahead of any major advanced economy.
These numbers will be of little comfort to the millions of our fellow Australians in lockdown. Lockdowns that are having significant impacts on not just the economy, but on people’s wellbeing as well.
But with strong progress on the vaccine rollout, there is light at the end of the tunnel. Today’s National Accounts provide confidence that our recovery will get back underway as restrictions are eased.
Twenty-nine days over the course of the June quarter saw at least one part of our country in lockdown, including in our four largest states.
But despite these challenges, in today’s national accounts, we see growth in household consumption, business investment, dwelling investment and new public final demand supported by our economic plan.
Household consumption increased 1.1 per cent in the June quarter contributing 0.6 percentage points to GDP to be up 15.4 per cent through the year.
Consumption increased in 12 out of 17 categories with continued strength in the consumption of services, such as transport services and hotels, cafes and restaurants as restrictions eased.
We continue to see the positive impacts from the Government's investment incentives which were expanded and extended as part of the Government's economic plan announced in the Budget.
New business investment rose by 2.3 per cent in the June quarter with continued strength in new machinery and equipment investment which increased 2.4 per cent to be 19.5 per cent higher through the year.
Since the October Budget, investment in new machinery and equipment has increased 22.4 per cent.
This is the strongest period of growth since December 2002 as firms take advantage of the Government’s immediate expensing and loss carry back measures.
Dwelling investment grew 1.7 per cent in the June quarter, which continues to be supported by record low interest rates, strong household savings and the Government’s HomeBuilder program.
The pipeline of residential construction will continue to support demand with around 151,000 private house approvals made over the year to July 2021.
New public final demand increased 1.9 per cent in the quarter supported by the Government’s record infrastructure investment pipeline.
After a strong result in March, inventories detracted 0.2 percentage points from growth.
Net exports also detracted from economic growth in the June quarter as export volumes were hampered by decreases in mining export volumes, driven by supply disruptions and severe weather conditions. Services trade continues to be impacted by international border closures.
Despite the fall in export volumes, the trade surplus increased to a record high in the June quarter, which saw strong iron ore prices.
This has helped deliver a record run of nine consecutive current account surpluses. The longest period of current account surpluses on record.
We have also continued to see the rural sector benefit from favourable conditions, with farm GDP growing by 1.5 per cent in the June quarter, to be 48.3 per cent higher than the June quarter last year.
Turning to the income side of the accounts, compensation of employees, the measure of the national wages bill, increased 1.3 per cent in the quarter to be 6.8 per cent higher over the year.
This was the strongest through the year rate in the wages bill since March 2012.
Almost 115,000 jobs were created in the quarter with the unemployment rate falling below its pre-pandemic level - ahead of Budget forecasts.
Household gross disposable income continues to be supported by the Government’s tax relief with a further $3.8 billion flowing to more than 11 million individuals in the June quarter 2021.
This has helped to boost household balance sheets, with household disposable income being 6.0 per cent higher than pre-COVID levels.
The household saving ratio declined from 11.6 per cent to 9.7 per cent, but remains at elevated levels.
Company profits increased during the quarter, reflecting strong commodity prices, however, outside the mining sector, profits were softer.
Nominal GDP growth was strong and for the financial year increased 4.1 per cent ahead of the Budget forecast of 3 ¾ per cent.
What these numbers show is that our economy remains remarkably resilient, even in the face of repeated lockdowns.
Today’s numbers should give Australians confidence, despite the difficulties we face, that our economy will bounce back once restrictions ease.
Our labour market remains strong, with the unemployment rate at a 12-year low.
Economic support continues to flow to those in need through our COVID Disaster Payment and our business support packages.
Measures announced in recent Budgets, like HomeBuilder, income tax relief and immediate expensing, are having their intended effect.
Australia has maintained its AAA credit rating.
Household and business balance sheets have accumulated $290 billion that was not there at the start of the pandemic.
And Australia has a plan to re-open once vaccination targets reach 70-80 per cent.
There is light at the end of the tunnel.
The vaccination program has gathered real momentum, as Australians recognise we cannot eliminate, but must learn to live safely with COVID-19.
Today’s National Accounts do not change the fact that our economy faces some difficult days ahead. But we have the plan. We need to stick to the plan. A plan which will see Australia come through this crisis stronger on the other side.