The Australian economy expanded again in the third quarter, with the effects of interest rate hikes on household spending yet to be reflected in the national accounts.
Figures from the Australian Bureau of Statistic show the economy grew for a fourth consecutive quarter in the three months to September, lifting by 0.6 per cent.
The economy grew by 5.9 per cent in the 12 months to September this year, as it rebounded from a trough in the third quarter of 2021 when Covid-19 Delta variant lockdowns forced the economy to contract.
Household spending was behind economic growth in the September quarter, with Australians saving less and spending more.
Australians spent more on discretionary purchases, with spending on hotels, cafes and restaurants up 5.5 per cent, transport services and travel up 13.9 per cent and vehicles up 10.9 per cent.
The average household saved 6.9 per cent of its income during the September quarter, compared to 6.8 per cent in the December quarter of 2019.
The Australian economy expanded again in the third quarter. Picture: istock
Household spending increased by 1.1 per cent for the quarter and contributed 0.6 percentage points to Australia’s gross domestic product.
The ABS uses GDP, which is the total value of goods produced and services provided in the country during the year, to measure how Australia’s economy is faring.
The household saving to income ratio fell for the fourth consecutive quarter, from 8.3 per cent to 6.9 per cent, as increases in household spending outpaced household income growth.
This was despite a large increase in compensation of employees, which increased by 3.2 per cent in the strongest rise since December quarter 2006.
Treasurer Jim Chalmers welcomed the “solid headline figures” but said he knew Australians were feeling the strain of the combined impact of the global energy crisis, cost-of-living pressures and rising interest rates.
The release of the national account figures on Wednesday comes after the Reserve Bank of Australia hiked interest rates for an eight consecutive month on Tuesday.
More to come.