GDP in detail: Income boom!

The Australian Bureau of Statistics (ABS) today released the national accounts for the March quarter, which registered a 1.8% rise in real GDP over the quarter with GDP also rising 1.1% through the year.

On a per capita basis, real GDP rose by 1.7% over the quarter to be up 0.8% over the year.

The seasonally adjusted GDP rebound was driven by household consumption expenditure and inventories, which each contributed 0.7% to growth:

GDP aggregates

Household consumption and inventories drove GDP over Q1.

The next chart shows the ongoing rebound in GDP against the record 7.0% contraction in the June quarter on 2020:

Real GDP

GDP rebound continues.

Australia’s real GDP is now tracking 0.8% above its December 2019 peak, whereas GDP per capita is now 0.2% higher:

GDP versus pandemic

GDP is now running above its pre-COVID peak.

Quarterly final demand, which excludes export volumes, rebounded another 4.6% over the December quarter, with all jurisdictions experiencing rebounds:

State final demand

Solid growth in Q1.

In the year to March 2021, final demand rose by 1.9% nationally, with only Victoria recording falls:

Annual state final demand

Annual state final demand higher everywhere but Victoria.

As already reported this morning, the terms-of-trade rocketed by 7.4% over the March quarter and was up a whopping 15.4% year-on-year:

Terms of trade

Terms of trade booms.

Accordingly, the terms-of-trade bolstered national disposable income, which rose by 3.4% in per capita terms to a new record high over Q1:

National disposable income per capita

National disposable income per capita soars to record high.

Moreover, nominal GDP growth rose by 3.5% over the quarter to be 4.0% higher over the year:

Nominal GDP

Nominal GDP rebounding hard.

Average compensation of employees rose by 0.1% in the March quarter in nominal terms to be up 3.3% over the year:

Average compensation of employees

Average compensation of employees is gradually rebounding.

Real GDP per hour worked (i.e. labour productivity) rose 0.8% over the March quarter to be up 2.5% year-on-year:

Labour productivity

Labour productivity rose in Q1.

The household savings ratio also retraced by 0.6% to 11.6%. This helped to bolster growth in household consumption expenditure:

Household savings rate

Household savings rate falling from peak.

Finally, the growth baton is successfully being passed from governments (via stimulus) to households:

Net savings

Baton pass from government to households.

In summary, after the Australian economy entered its first ‘technical recession’ since the early 1990s, the economy is experiencing a V-shaped recovery. We expect the recovery to continue through 2021.

Unconventional Economist

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