The Australian Economy – June Quarter 2024: A Snapshot
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in Australia Immigration News, Australian Migration Strategy & Policy, Skilled Migration News
In the June quarter of 2024, Australia’s economy saw modest growth, continuing its post-pandemic recovery, though some challenges emerged. Here’s a breakdown of the key economic trends:
Economic Growth Slows
Australia’s economy expanded by a modest 0.2% in the June quarter and 1.5% over the financial year 2023-24. This marked the eleventh consecutive quarter of growth, though per capita GDP fell for the sixth consecutive quarter, dropping by 1.0%. While total GDP grew, the decline in per capita GDP highlights the effects of population growth outpacing individual economic contribution.
Inflation Picks Up
After falling for several quarters, inflation rose again in the June quarter. The consumer price index (CPI) increased by 1.0%, bringing annual inflation to 3.8%, up from the same quarter in 2023. This was the first annual inflation increase since late 2022. Key drivers of price hikes included new homes, fuel, and fresh produce. Meanwhile, underlying inflation, measured by trimmed-mean inflation, continued to decrease.
Wages on the Rise, But Growth Slows
Wage growth persisted, with the wage price index rising by 0.8% in the June quarter, representing a 4.1% increase year-over-year. Private sector wages saw slower growth, increasing just 0.7%, matching the lowest rise since late 2021. The unemployment rate nudged up slightly to 4.1%, while the total hours worked rose by 1.1%, a slower rate than in the previous year.
Decline in Consumer Spending
Household spending dropped by 0.2% in the June quarter, reversing the 0.6% increase seen earlier in the year. The decline was driven by reduced spending on non-essential items like travel and events, as well as a 1.0% decrease in grocery spending as consumers sought to manage rising costs.
Savings Rate Remains Low
Households saved just 0.9% of their income over the year, the lowest savings rate recorded since 2006-07. With household spending outpacing income growth, savings have remained limited.
Government Spending Increases
The government’s spending on public services contributed positively to economic growth, adding 0.2 percentage points to GDP. Increased spending on household benefits and healthcare programs supported this boost.
Trade Adds to Economic Growth
Trade provided a lift, with exports rising by 0.5% in the June quarter, driven by a strong rebound in travel services, which surged by 9.9%. Imports, on the other hand, fell by 0.2%. However, a decline in commodity prices and higher payments to non-residents led to the largest current account deficit since 2018.
Drop in Capital Investment
Capital investment continued to decline, with a 0.1% dip in the June quarter. Investment in new machinery and equipment fell by 1.6%, particularly in the agriculture and retail sectors. Despite this, businesses anticipate moderate growth in capital investment for the next financial year.
Conclusion
The June quarter of 2024 highlighted both strengths and weaknesses in the Australian economy. Although growth continued, rising inflation, sluggish consumer spending, and falling per capita GDP indicate potential challenges ahead. However, with wage increases and a boost from trade, there are signs of optimism for the future.
