Australia’s gross domestic product (GDP) rose 0.1% in Q1 2024 and 1.1% since March 2023, according to figures released by the Australian Bureau of Statistics (ABS) today (5 June 2024).
ABS Head of National Accounts Katherine Keenan says GDP growth was “weak in March”, with the economy experiencing its lowest through-the-year growth since December 2020.
GDP per capita fell for the fifth consecutive quarter, falling 0.4% in March and 1.3% through the year.
Saxo Head of FX Strategy Charu Chanana says today’s Australian GDP data print was below the 0.2% estimate.
“The muted reaction of the AUD to Australia’s Q1 GDP miss is a signal that markets are not worried about the risk of an early rate cut from the RBA. The AUD is likely to stay supported with gains in commodities and the recovery in China,” Chanana says.
Domestic final demand was subdued during the March quarter, growing 0.2%. The rise in imports of goods and services was offset by an increase in exports and change in inventories.
Metal ore and non-metallic mineral mining drove the rise in mining inventories, as production rose more than demand.
However, net trade detracted 0.9 percentage points from GDP growth, with stronger imports (+5.1) than exports (+0.7%).
Goods imports rose 6.5% as consumption and capital goods all increased. Services imports rose 0.7%, driven by transport services, while travel services had its second quarterly fall as travellers reduced overseas spending.
Goods exports rose 1.1%, largely driven by liquified natural gas (LNG), non-monetary gold, and meat. These increases were partly offset by falls in exports of coal and other rural goods. Services exports fell 1.1%, mainly due to a fall in travel services.
According to the ABS, change in inventories rose $2.2 billion, contributing 0.7 percentage points to GDP growth. Wholesale and retail inventories run down last quarter were rebuilt with the increase in imports.
“This reduced demand for mining commodities led to a 5.3% fall in mining profits this quarter, after a 7.9% rise last quarter,” the ABS reports.
Government final consumption expenditure rose 1% per cent in March. Both national (+1.2%) and state and local (+0.8%) spending contributed to this increase.
Keenan says government benefits for households drove the growth in government spending, as the Federal Government increased spending on medical services and some state governments provided energy bill relief payments.
Meanwhile, household spending rose 0.4% in the March quarter.
“Essential categories like electricity, health, rent and food drove growth again this quarter. “We also saw increases in some discretionary categories because of overseas travel and spending on gambling, sporting and musical events,” Keenan adds.
Write to Adam Orlando at Mining.com.au
Images: ABS & Metro Mining
