|Data from the Australian Bureau of Statistics (ABS) shows the Australian economy grew by 0.8% in seasonally adjusted chain volume terms during Q2 2017.
In Q2, domestic spending increased 1.0%, driven by a 0.7% growth in household consumption, with expenditure on food, clothing and household furnishings increasing. Dwelling construction grew a moderate 0.2%, with growth primarily in New South Wales and Queensland.
Growth was also observed in industries providing services to business. Professional, Scientific and Technical Services, Financial and Insurance Services, and Information, Media and Telecommunications all recorded above trend growth; while the Manufacturing industry grew 1.8%.
Falling prices for key export commodities impacted the terms of trade, declining 6.0%. This impacted GDP, which fell 0.1% as lower coal and iron-ore prices contributed to more subdued company profits. Gross operating surplus from businesses declined 2.6% for the quarter.
GDP growth for the FY2016/17 was 1.9%.
Commenting on the statistics, ABS Chief Economist, Bruce Hockman said: “Recent indicators showing increased business confidence appear to be reflected by the 3.2% quarterly increase in purchases of new machinery and equipment as well as increases in the previously published June quarter employment and hours worked estimates.”
The increases in hours worked resulted in an increase in Compensation of Employees (COE) of 0.7% despite the subdued wage pressures in the economy. This moderate increase in COE coupled with the strong increase in household spending saw the percentage of income which households are saving fall to 4.6%.