As per the latest data released by the Australian Bureau of Statistics (ABS), real Gross Domestic Product (GDP) for Australia has risen by 0.5 per cent in the June 2016 quarter. This has been slightly below expectations for an increase of 0.6 per cent while the March quarter GDP growth rate previously reported an increase of 1.1 per cent which was later revised down to 1.0 per cent. However, the year-on-year growth rate has moved up to 3.1 per cent with the June quarter figure and this is the fastest seen in four years. This annual rise is in line with market expectations. With the above result, the economy has undergone 25 years without being in recession.
GDP Trend (Source: Australian Bureau of Statistics)
The key highlights of the recent data include:
Mining the biggest contributor: The biggest contribution to the growth came in from Mining (0.8 percentage points), Financial and insurance services (0.5 percentage points), Public administration and safety (0.3 percentage points), Construction (0.2 percentage points) and Wholesale trade (0.2 percentage points) industries. On the other hand, Manufacturing (-0.2 percentage points) was the largest drag in trend terms.
Terms of trade on the rise in the quarter: The other key aspect was the terms of trade that jumped 2.3 per cent in seasonally adjusted terms in the June quarter following a decrease of 2.1 per cent in the March quarter, and this added to the income growth. However, the terms of trade fell 5.4 per cent in seasonally adjusted terms from June quarter 2015 to June quarter 2016.
Support from government investment: Total investment was flat in the quarter but public investment increased 15.5 per cent driven by state and local general government (21 per cent). This was at the back of the transfer of assets from the private sector, which contributed to a fall of 3.4 per cent in private investment. Government investment led to a contribution of 0.7ppts to real GDP.
Domestic final demand scenario: Domestic final demand that surged 0.6 per cent also drove the overall growth while there was support from ongoing growth in household and public consumption. For Western Australia, the state final demand fell 2.5 per cent during the quarter while ACT saw a surge of 3.8 per cent, NT was up 2.4 per cent, Tasmania and Victoria both were up 1.1 per cent.
More or less the GDP numbers have been steady post the recent decision from the Reserve Bank of Australia on holding the cash rates steady at its September board meeting.