Today's National Accounts release shows modest economic growth in the September quarter after strong growth in the June quarter. GDP increased by 0.2 per cent in the September quarter to be 2.6 per cent higher through the year. Non-farm GDP was slightly stronger, increasing by 0.3 per cent in the September quarter to be 2.9 per cent higher through the year.
National income growth remains very strong, with real gross domestic income 4.8 per cent highest through the year to the September quarter, supported by high prices for a number of Australia's major commodity exports. Australia's terms of trade rose by 1.8 per cent in the September quarter, and are now at their highest level since the March quarter 1974.
Household consumption grew by 0.6 per cent in the September quarter, to be 2.7 per cent higher through the year. High petrol prices and the gradual waning of the housing boom contributed to the recent moderation in household consumption growth. Despite easing from their September quarter peaks, petrol prices remain high by historical standards. The outlook is for household consumption to grow at a moderate rate, supported by favourable labour market conditions and solid wage growth.
Strong growth in corporate gross operating surplus, combined with healthy corporate balance sheets and high levels of capacity utilisation, continue to support business investment. New engineering construction grew by 5.8 per cent in the September quarter to be 28.7 per cent higher through the year. New building and new machinery and equipment investment also grew solidly in the September quarter, with total new private business investment increasing by 2.5 per cent in the September quarter to be 17.6 per cent higher through the year.
Dwelling investment fell by 0.5 per cent in the September quarter, to be 1.4 per cent lower through the year. To date the dwelling cycle has been relatively muted, with the housing market moderating from the very high levels of activity seen in recent years.
Net exports subtracted 0.3 of a percentage point from GDP growth in the September quarter. Export volumes fell 2.3 per cent in the quarter but remain 2.6 per cent higher through the year. The fall in the quarter was driven by a 3.5 per cent fall in non-rural exports, as maintenance and expansion related stoppages limited mineral resource exports. Following the mining sector's investment of around $30 billion in new productive capacity over the last 3 years, export volumes are expected to receive a significant boost over the next year or two as this new production comes on line. Import volumes fell 0.5 per cent in the September quarter, largely due to falls in imports of intermediate and capital goods.
Inflation remains contained, despite higher petrol prices in the September quarter. The household consumption chain price index increased by 0.8 per cent in the September quarter to be 2.3 per cent higher through the year.
The Australian economy continues to produce good economic outcomes, with the unemployment rate at around 30 year lows, inflation well contained, and relatively low interest rates. While the outlook for the Australian economy remains positive, a focus on reform remains vital to Australia's future economic success. This Government is committed to pursuing reforms that promote growth and improve living standards.