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Economics update | September 9, 2022
08 Sep 2022
GDP rose 0.9 per cent for the June quarter
Australian National Accounts data released earlier this week show GDP rose 0.9 per cent for the June quarter and 3.9 per cent over 2021-22. Largely facilitating this quarterly growth was an increase in household spending of 2.2 per cent and an increase in the export of goods and services of 5.5 per cent, each contributing 1.1 per cent to GDP. The removal of COVID-related travel restrictions accelerated spending on transport (+37.3 per cent); hotels, cafes and restaurants (+8.8 per cent); and recreation and culture (+3.6 per cent).
Price pressures continue with the GDP implicit price deflator increases by 3.3 per cent for the second consecutive quarter, and 6.9 per cent higher year-on-year. Household savings ratio declined from 11.1 per cent in March to 8.7 per cent in June, in line with the increased price pressure, increasing cash rates and household spending.
Compensation of employees (COE) continued to grow, with a 2.4 per cent rise in the June quarter, sourced predominantly from a 3.1 per cent rise in the private sector. This is consistent with an increase of 2.9 per cent in hours worked, decreased COVID-related absenteeism and labour and skill shortages resulting in businesses paying more to retain staff.
RBA raises cash rate by 50 basis points
The RBA has raised the cash rate by 50 basis points to 2.35 per cent. This is the fifth consecutive increase in interest rates as the Reserve Bank aims to curtail rising inflation, as consumer prices (CPI) rose to 1.8 per cent in the June quarter and 6.1 per cent for the year. This confirms the current cost pressures imposed on the economy that are forecasted to place ongoing stress on household and business budgets.
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