We are living in 'interesting' times, aren't we?
With inflation being the highest it’s been for years, interest rates rose again this month and people are wondering how high they will go, plenty of stocks are down, and the war in Ukraine continues, supply chains are broken, the pandemic is lingering, China is in lockdown, we have a new government, and on and on.
But aside from these, there are other things that happened in Australia's economy, particularly this June 2022 quarter.
1. Australia's economy grew 0.9%
The Australian economy grew 0.9% during the June quarter 2022, and 3.6% over the past year.
This is the strongest year-on-year growth since 2011-12.
Strength came from household consumption, which grew 2.2%, and exports.
The continued growth was aided by the first full quarter of re-opened domestic and international borders since the pandemic began.
2. Australians took to the skies again
The June quarter was the first since the start of the pandemic when international and domestic borders were open and there were no restrictions on movement.
We began travelling internationally again, and spending on international travel reached 38.6% of pre-pandemic levels.
Overall household spending rose 2.2% this quarter.
Spending on services increased 3.6%, exceeding pre-pandemic levels for the first time.
The easing of travel restrictions accelerated spending on transport and other related services.
Hotels, cafes and restaurants (+8.8%), transport services (+37.3%) and recreation and culture (+3.6%) all contributed to the rise.
Spending on goods decreased 0.1%, as heightened demand during the onset of the pandemic began to stabilise.
3. We went out more
Household consumption of transport services rose 37.3% during the quarter, reaching two-thirds of pre-pandemic levels.
Spending on eating out and accommodation rose 8.8% and returned to pre-pandemic levels.
Capacity restrictions ended, which saw spending on recreation and culture increase 3.6%.
4. We purchased less food from shops
As dining out increased, purchases of food from supermarkets and specialty stores fell 1.2%.
This was the third quarterly fall in a row.
5. We saved less
The household saving rate continued to fall but was still above pre-pandemic levels.
Households saved 8.7% of their income during the quarter, down from 11.1% in the March quarter of 2022, but this remains slightly above pre-pandemic levels.
Household savings fell as the rise in household spending outpaced growth in gross disposable income.
6. Hours worked grew
Hours worked grew 2.9% during the quarter as the labour force recovered from the Omicron wave and devastating floods in New South Wales and Queensland.
The unemployment rate for the month of June was 3.5%.
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7. Home building fell for the third quarter in a row
Home building fell for the third quarter in a row, falling 2.9% during the June quarter.
Unfavourable weather subdued growth on the east coast.
Trade and material shortages, and workforce illnesses also contributed.
8. Export volume surged
Export grew 5.5% during the quarter, the fastest rate of growth since September 2000.
Growth was driven by rural goods such as wool, meat and cereals, as well as mineral ores such as iron ore and lithium.
9. Trade surplus of 7.1 per cent of GDP
The June quarter of 2022 recorded a trade surplus of 7.1 per cent of GDP, the largest trade surplus in the history of the national accounts.
On the back of this trade surplus, Australia recorded its thirteenth consecutive current account surplus in the June quarter of 2022, following 175 consecutive quarters of current account deficits.
10. The transport, postal and warehousing industry boomed
This is because of the demand for air transport services.
The accommodation and food services industry grew on the back of increased domestic tourism, and the health care industry grew as elective surgeries resumed.
11. Consumer prices rose
Consumer prices rose 1.8% during the June quarter of 2022 and 6.1% over the year.
This was the fastest annual increase since June 2001.
The major drivers of consumer price increases were housing and fuel.
The GDP deflator, a broad measure of price pressures across the whole economy, rose 8.3% over the year.
12. Wage growth continued to trail inflation
Wage growth continued to trail inflation, despite a strong labour market.
The Wage Price Index rose 0.7% during the quarter and 2.6% over the year.
13. Labour productivity has grown strongly
GDP per hour worked (labour productivity) grew 2.1% during the financial year 2021/22, the strongest annual growth in 10 years.
14. Miners continued to benefit from rising commodity prices
The share of national income going to business profits during the June quarter was a record high of 32.9%, while the share going to labour was 48.5%, the lowest share ever recorded despite solid growth in employee earnings.
15. Support from governments remained above pre-pandemic levels
Subsidies to businesses fell, though remained $2.1 billion higher than pre-pandemic levels.
Government consumption fell 0.8% following the response to the east coast floods in the March quarter.
16. 'Cost of living’ tax relief
‘Cost of living’ tax relief meant excise taxes collected by the Commonwealth government fell 34.1% following the temporary halving of the fuel excise at the end of the March quarter.
Source of data and charts: ABS
