Economic growth fell in the December quarter, with falling exports crimping growth despite a strong performance from households.
Today’s national accounts data from the Australian Bureau of Statistics shows the economy grew 0.4% seasonally adjusted in the three months to December and 2.4% over 2017. It was the lowest quarter-on-quarter rate since the 0.2% contraction in the 3rd quarter of 2016.
The result was weighed down by lower exports, which reduced growth in the quarter by 0.4 percentage point, and higher imports (0.1 points). There was some good news, however, on wages: compensation of employees grew 1.1% in the quarter, with the construction and accommodation and food sectors showing the strongest growth, along with the usual suspects health and education. That helped fuel a rebound in household consumption, which rose 1.0% in the quarter with strength recorded in discretionary spending on hotels, cafés and restaurants and recreation and culture — although our savings rate remains very low at 2.7%.
Overall, private investment detracted from growth due to a decline in dwelling investment and a sharp fall in new engineering construction. But private investment in machinery and equipment remained strong, as did construction of non-residential buildings.