Three months ago Australia’s economy went backwards and there was a chance today’s figures could produce the first technical recession in more than a generation.
But the result was just the opposite.
Today’s National Accounts show the economy expanded by 1.1 per cent in the December quarter, after a shock 0.5 per cent decline in the previous three months.
The annual rate has lifted from 1.8 per cent to 2.4 per cent, with the main contributions coming from household consumption and government spending.
The figures are a relief for Treasurer Scott Morrison, who was facing the prospect of being in charge of the books when Australia’s record run of 26 years of economic growth came to an end.
“While this growth result is welcome, we must continue to remember that our growth cannot be taken for granted,” Mr Morrison told journalists at Parliament House.
“It would be wrong, just plain wrong, to assume that those gains have been experienced evenly across all businesses in the economy.”
But if Australians aren’t feeling the benefits of a rebounding economy, they have good reason. Wage growth went backwards in the quarter.
“Today’s results is principally driven by a solid rebound in household consumption, despite subdued wages growth,” Mr Morrison said.
“It was up 1.5 per cent in the year. While we saw more jobs in the quarter, with modest wage increases and compositional changes, this modest result was disappointing.
“This is why the core task of the government remains to increase what hard-working Australians can earn.”
Chris Richardson from Deloitte Access Economics agreed with the Treasurer’s analysis.
“These numbers are great but they’re not yet family friendly. Wage growth in particular remains the sickest bit of the economy,” Mr Richardson told SBS News.
“The biggest thing in the economy is the spending of mums and dads, households.”
“Most things in the Australian economy are going right and 2017 looks like being better than most people expected,” Mr Richardson said.
CommSec economists released a response which said that they are not surprised, given the September quarter contraction does appear to have been an aberration.
“The important point is that everything that could have gone wrong in the September quarter did go wrong – bad weather, elections, geopolitical events. The economy contracted, but that under-represented the true health of the economy. Growth was always going to bounce back and it did,” CommSec said.
“The latest result highlights the shift in momentum that has taken place in the past few months. The Australian economy is getting its mojo back, now it is up to policymakers to foster an environment that ensures businesses feel comfortable to lift investment levels.”
Small Business Secrets