4 March 2015
Media Release - #2015012, 2015

National Accounts – December Quarter 2014

The Australian economy grew by a solid 0.5 per cent in the December quarter to be 2.5 per cent higher over the past year. This is up from a revised 0.4 per cent in the September quarter.

Growth was supported by a welcome lift in household spending, strong exports and further investment outside of the resources sector, especially in construction.  

This shows that we are managing a very challenging transition, from the mining construction boom to broader based growth.

The low interest rate environment and rising household wealth is driving household spending.  Household consumption grew by a strong 0.9 per cent in the quarter, to be 2.8 per cent higher over the year.  This is the strongest outcome for household consumption in almost three years. 

Household savings continued to drift down from high levels, as consumers become more confident about the future.

Housing investment rose by 2.5 per cent in the quarter to be a remarkable 8.1 per cent higher than it was a year ago.  Strong building approvals and other indicators suggest that residential investment will continue to grow, which will increase spending on such things as furniture, electrical appliances and other household goods.

Consistent with higher household spending, firms in the services sectors undertook solid investment spending in 2014. The capital expenditure in these areas grew over 10 per cent, its fastest rate in 7 years.

As was expected for some time, mining investment fell as the construction phase of the mining boom continues to wind down from its record highs.

Productivity growth remains a challenge over the long term. There are signs that productivity is improving in the mining sector, however more generally we have seen labour productivity fall as employment growth has picked up.

Supported by a lower exchange rate, exports continue to grow strongly, especially in the mining sector where we are now seeing the dividends of years of mining investment.  With falling imports, net exports have provided the largest contribution to growth this quarter.

Our income as a nation picked up in the quarter, with nominal GDP rising by a solid 0.6 per cent. Real gross national income also rose in the quarter.

We continue to face global headwinds from Europe and Asia, which have put downward pressure on our commodity prices.  The terms of trade fell by a further 1.7 per cent in the quarter, its fourth consecutive fall. Since coming to Government we have witnessed one of the largest falls in the terms of trade.  

That said, Australia is performing well by international comparisons. Our economy over the past year has grown faster than the United States, Germany and Japan, and other key trading partners such as Hong Kong and Singapore.  Furthermore we remain comparable to the best performing developed nations, such as the United Kingdom and Canada.

With continuing low interest rates, low petrol prices and a lower Australian dollar, we are in a good position to manage the transition and maintain our positive economic trajectory. 

This is good for jobs and good for Australian business.

National Accounts Briefing Slides [PPS 532KB]