National Accounts

Today’s National Accounts confirm that momentum in the Australian economy is moderating largely as expected.

These figures are not surprising given the significant headwinds from higher interest rates, high inflation, and a slowing global economy.

The numbers confirm what Australians already know ‑ that household budgets are under pressure from rising interest rates and higher cost of living.

Growth in the Australian economy slowed to 0.2 per cent in the March quarter and 2.3 per cent over the year.

Higher interest rates and cost‑of‑living pressures are taking their toll, with household consumption growth easing for the third consecutive quarter.

Household consumption grew by just 0.2 per cent in quarter, contributing just 0.1 per centage points to growth.

Households have pulled back on discretionary spending to make room for essentials.

Mortgage interest expenses also doubled over the year to the March quarter, and the household saving ratio declined further to 3.7, its lowest rate since 2008.

Dwelling investment fell by 1.2 per cent in the quarter, although continued work on a large backlog of detached houses is expected to support residential construction activity over 2023.

With many Australians under the pump, its pleasing to see household incomes grew solidly in the quarter, while price pressures moderated.

With more Australians in jobs and earning more, compensation of employees rose by 2.4 per cent in the quarter and 10.8 per cent over the year.

This helped support household disposable incomes, which rose 0.8 per cent in the quarter, and 2.3 per cent through the year.

The National Accounts measures of consumer prices confirms that inflation is moderating from its peak, but it remains higher than we would like at 6.5 per cent over the year to March.

We welcome signs that business investment picked up as the impacts of global supply shocks recede.

New business investment grew 2.9 per cent in the quarter.

The easing in supply chain pressures has meant many firms, including small to medium businesses in manufacturing, transport and mining, have been able to get much needed capital in place.

After a number of difficult years, the March quarter results show continued recovery in our tourism and education export sectors. Services exports were up 7.7 per cent in the quarter.

We continue to get good prices for our key exports. Although export prices fell 1.4 per cent in the quarter, they remain 4.2 per cent higher through the year.

We understand that inflation, higher interest rates and cost‑of‑living pressures are not only straining household budgets but slowing growth as well.

Our economic plan is squarely focused on providing relief where we responsibly can while addressing inflation, repairing our broken supply chains and investing in the productive capacity of our economy.

We’re providing responsible cost‑of‑living relief without making the inflation challenge worse. The RBA Governor has already made it clear that the Budget is addressing inflation, not adding to it.

We are laying stronger foundations for future growth by investing in our people and their skills, supporting small businesses to innovate and grow, investing in our strategic industries and renewable energy, and modernising our industrial base.

We remain focused on dealing with the immediate challenges Australians are facing and building a stronger, more productive, and more resilient economy for the future.