I have had a very quick skim of the ABS National Accounts.
In short, there’s a bit of a mess of much good news and bit of bad news about the economy.
Let me give you a few examples.
The best news is around business investment, which is one thing Australia has been lacking and has contributed to our lacklustre productivity growth.
Private investment jumped by 2.9% in the quarter, which was the strongest in four-and-a-half years and contributed 0.5 percentage points to overall economic growth in the quarter (i.e. the equivalent of all of it and then some).
The ABS said this was driven by a 7.6% surge in machinery and equipment investment, which it attributed largely to major new data centres in New South Wales and Victoria.
Seems like Australia is playing some catch up with the US on the AI boom.
There was also good news for the federal and state government home building ambitions, with a 1.8% increase in dwelling investment adding 0.2 percentage points to the quarterly GDP number.
The downside of this was a 5% jump in home ownership transfer costs as the established housing market boomed in price and turnover — a great thing for real estate agents, conveyancers, mortgage brokers and banks, but not so much for everyone else.
Public investment in power, water and transport projects also added 0.2 percentage points to growth, as did government consumption spending.
Household consumption is interesting. It grew 0.5% (only just ahead of population growth, which was 0.4%), and added 0.3 percentage points to the overall quarterly GDP growth of 0.4%.
However, the detail hints at a weaker consumer than the headline suggests. Discretionary spending flatlined, with a 1% rise in essentials spending offsetting that.
We spent more on essentials because the super guarantee went up, insurance and financial costs went up, rents went up, electricity prices went up as rebates rolled off and it was cold so we used more power and gas, plus health spending went up because more of us got sick with the flu in that miserable late winter weather.
So, not exactly a happy time for most households in the three months to September 30!
The big drags on the quarterly GDP number cited by the ABS were a fall in net exports (took 0.1 percentage points off) and a decline in inventories (which took 0.5 percentage points off).
The ABS says the decline in inventories was mainly in the commodities sector as iron ore and LNG producers did maintenance and sold of stockpiles.
Even though this took away from GDP in this quarter, it’s a good subtraction, as rebuilding some of these inventories will likely add to GDP in future quarters.