The Australian Bureau of Statistics (ABS) today released the national accounts for the June quarter, which registered 0.9% growth in real GDP over the quarter and a 3.4% rise over the year.
On a per capita basis, real GDP rose by 0.5% over the quarter and was up by 1.8% over the year.
However, real national disposable income (NDI) per capita fell by 0.2% over the quarter but was up 2.1% over the year.
However, most importantly for Australian workers, average compensation per employee rose by just 1.7% in the year to June, and remained negative after adjusting for inflation (2.1%).
According to the ABS, seasonally adjusted GDP growth for the quarter was driven by household and government consumption, as well as net exports:
Quarterly final demand, which excludes export volumes, rose by 0.6% over the June quarter, driven largely by VIC (+1.2%):
In the year to June 2018, final demand growth was solid, growing by 3.5% nationally. Growth was solid everywhere except WA and NT:
The terms-of-trade fell by 1.3% over the quarter in seasonally adjusted terms but rose by 1.0% in trend terms. However, over the year it rose by 2.1% in seasonally adjusted terms and by 0.6% in trend terms:
The fall in the terms-of-trade detracted from national income growth, with real NDI rising by just 0.3% over the quarter and by 3.7% over the year.
However, after population growth, per capita NDI fell by 0.2% over the quarter but rose by 2.1% over the year.
In trend terms, since December 2011, per capita NDI has risen by just 0.7% versus 6.9% growth in real per capita GDP:
As noted above, average compensation of employees remains in the gutter. While it rose by 0.3% in the June quarter in nominal terms, it was up just 1.7% in the year to June 2018:
Adjusting for inflation, the situation facing Australian workers is even worse, with real average compensation falling (down 0.4% year-on-year).
After falling recently, nominal GDP rebounded in the June quarter, but remains soft. Nominal GDP rose by 1.0% over the quarter but just 5.5% over the year:
The below chart shows that trend nominal GDP is again tracking well below the average since 1990, which continues to make life challenging for Government finances:
After rebounding last quarter, real GDP per hour worked fell by 0.2% in the June quarter and was up only 1.0% over the year, suggesting sluggish labour productivity:
Meanwhile, the household savings ratio has collapsed, down another 0.6% to just 1.0% – the lowest reading in the post-GFC era:
In summary, while the headline figures are strong, there is continued weakness under the hood.
First, Australian workers’ incomes remain in the gutter, with the average compensation of employees continuing to fall in the year to June when adjusted for inflation.
Second, with wages and salaries going backwards in real terms, households have been running down their savings, as evidenced by the continued expansion of household debt and the collapse in the household savings rate to its lowest level in the post-GFC period. This is clearly an unsustainable support to household consumption, which is the main area supporting domestic demand (along with government spending).
Third, Australia’s 10-year annualised growth in per capita GDP continues to track near its lowest level on record – i.e. even worse than the 1980s and early-1990s recessions:
Finally, labour productivity is weak, as evident by sluggish growth in GDP per hour worked.
So, while there is still the ‘illusion’ of growth at the aggregate economy level, thanks in part to force-fed mass immigration and government spending, along with debt-fueled consumption, the situation facing ordinary workers remains glum.
This is Australia’s ponzi economy in action: everyone’s share of the economic pie is not increasing sufficiently, wages are going backwards, and living standards in the big cities are being crush-loaded by the never ending people flood.
