Today's National Accounts release shows that the Australian economy continued to perform exceptionally well in the September quarter, considering the effect of drought. Australia's GDP rose by 0.9 per cent in the quarter and by 3.7 per cent over the year.
The strong growth was underpinned by a solid increase in private investment. Overall spending continued to grow strongly in the quarter, and domestic final demand increased by around 6 per cent over the year.
Private business investment increased by 2.9 per cent in the September quarter, following strong growth in the previous quarter, to be 12.2 per cent higher than a year ago. Private business investment was boosted by an increase of almost 40 per cent in new engineering construction over the past year. The good investment outcome is consistent with recent capital expenditure surveys, which point to expected strong growth in business investment in 2002-03. Dwelling investment also continued to grow strongly in the quarter, increasing by 3.3 per cent to be up by more than 22 per cent through the year.
Household consumption grew moderately in the quarter, although increased by a solid 4.2 per cent over the past year, supported by solid employment growth.
The effects of the drought were evident in the sharp declines in agricultural production and farm income in the quarter. Agricultural production fell by 12.2 per cent in the September quarter. Exports fell, in part due to the drought and the weak global environment. Nevertheless, several non-farm sectors grew strongly in the quarter. The largest increase in production was in the construction industry, with wholesale trade and property and business services also making a substantial contribution to growth.
Income growth was strong in the September quarter. Compensation of employees increased by 2.1 per cent in the quarter, and corporate gross operating surplus increased by 1.6 per cent to be 9.2 per cent higher than a year ago. However, gross mixed income fell by 1.7 per cent in the quarter, reflecting the effects of the drought.
The September quarter National Accounts show that inflationary pressures in the Australian economy remain moderate. The household consumption chain price index - a broader measure of price increases than the CPI - rose by 0.7 per cent in the quarter and 2.8 per cent through the year. Non-farm average earnings increased by 1.4 per cent in the September quarter and by 3.4 per cent through the year.
The good outcomes in the September quarter National Accounts again demonstrate the resilience of the Australian economy. The Australian economy continues to outperform the major industrial economies of the world despite the substantial drag on growth from the drought.