The Australian Bureau of Statistics (ABS) today released the national accounts for the June quarter, which registered soft 0.5% growth in real GDP over the quarter and just 1.4% growth over the year.
On a per capita basis, real GDP was flat over the quarter, but down by 0.2% over the year.
Most importantly for Australian workers, average compensation per employee rose by 2.1% in the year to June – continuing the run of weak prints.
According to the ABS, seasonally adjusted GDP growth for the quarter was driven by public consumption spending and net exports, which each contributed 0.6% growth:
Quarterly final demand, which excludes export volumes, firmed marginally to only 0.2% growth over the June quarter, with significant variation across jurisdictions:
In the year to June 2019, final demand growth was anaemic, slowing to just 0.9% nationally (-0.7% on a per capita basis), with the mining strongholds continuing to struggle:
The terms-of-trade jumped by 1.5% over the quarter in seasonally adjusted terms and by 2.2% in trend terms. Over the year it rose by 8.9% in seasonally adjusted terms and by 8.8% in trend terms:
The strong lift in the terms-of-trade helped boost national income growth, with real NDI rising by 1.4% over the quarter and by 4.4% over the year.
After population growth, per capita NDI rose by 1.0% over the quarter and by 2.7% over the year.
However, in trend terms, since December 2011, per capita NDI has risen by just 2.9% versus 6.6% growth in real per capita GDP:
In a similar vein, nominal GDP rose by 1.2% over the quarter and was up 5.4% over the year, thanks to the rebound in the terms-of-trade:
As noted above, average compensation of employees remains stuck in the slow lane. It rose by just 0.6% in the June quarter in nominal terms and was up just 2.1% in the year to June 2019:
Adjusting for inflation, the situation facing Australian workers is glum, with real average compensation flat over the June quarter and falling by 2.9% since March 2012:
After rebounding last quarter, real GDP per hour worked rebounded slightly after falling for four consecutive quarters. It was up by 0.4% in the June quarter but down 0.2% over the year, suggesting sluggish labour productivity:
Meanwhile, the household savings ratio has fallen to the lowest level in the post-GFC era, falling by 0.7% to 2.3%:
In summary, not only is the headline growth figure weak, there is further trouble under the hood.
First, Australian workers’ income growth remains soft, as measured by the average compensation of employees.
Second, households have been running down their savings. This is clearly an unsustainable support to household consumption, which is the main contributor to domestic demand.
Third, Australia’s 10-year annualised growth in per capita GDP continues to track near its lowest level on record – i.e. around levels seen during the 1980s and early-1990s recessions:
Trend annual GDP per capita growth is also running at -0.2%, the lowest reading since the GFC, with headline growth also at GFC levels:
Fourth, domestic demand is falling in per capita terms.
Fifth, labour productivity is weak, as evident by the falling GDP per hour worked over the year.
Finally, Australia’s growth is being driven largely by public (taxpayer) expenditure, rather than the private sector, which is ultimately unsustainable:
So, while there is still the ‘illusion’ of growth at the aggregate economy level, thanks to force-fed mass immigration and government spending, along with debt-fuelled consumption, the situation facing ordinary Australians remains glum.
This is Australia’s ponzi economy in action: everyone’s share of the economic pie is not increasing sufficiently, real wages are stagnating, and living standards in the big cities are being crush-loaded by the never ending people flood.