Australia’s gross domestic product expanded a seasonally adjusted 1.8 percent on quarter in the first three months of 2021, the Australian Bureau of Statistics said on Wednesday.
That beat expectations for an increase of 1.5 percent following the 3.1 percent spike in the previous three months.
On a yearly basis, GDP was up 1.1 percent – again beating forecasts for an increase of 0.6 percent following the 1.1 percent contraction in the three months prior.
Capital expenditure was up 4.7 percent on quarter, accelerating from 3.6 percent in the previous quarter.
The deflator jumped 3.1 percent on quarter, up from 1.1 percent in Q4, while final consumption fell to 0.7 percent on quarter from 3.2 percent.
The terms of trade rose 7.4 percent this quarter and is at its highest level since December quarter 2011. Stronger export prices, particularly for iron ore and LNG, drove the quarterly rise. The strength in the terms of trade contributed to a 3.5 percent increase in nominal GDP.
Private investment rose 5.3 percent in March quarter to be 3.6 percent higher through the year, the first through the year rise since June quarter 2018. Both business and housing investment increased, supported by government initiatives and improved confidence.
Business investment was driven by a 11.6 percent rise in machinery and equipment, the strongest increase since December quarter 2009. Dwelling investment rose 6.4 percent with increased construction activity on renovations and detached housing, coinciding with the federal government’s HomeBuilder scheme.
Household expenditure rose 1.2 percent this quarter but remained 1.5 percent below December quarter 2019 pre-pandemic levels.
Spending on services (+2.4 percent) drove the quarterly rise. Hotels, cafes and restaurants, recreation and culture and transport services continued to rebound as movement and trading restrictions eased. Spending on services remains down on pre-pandemic levels, particularly those impacted by the closure of international borders.
Spending on goods declined 0.5 percent this quarter but remained at elevated levels. Expenditure on both food (-1.4 percent) and alcoholic beverages (-3.9 percent) fell, reflecting a shift towards dining out as restrictions eased.
The household saving to income ratio declined from 12.2 percent to 11.6 percent and remained at elevated levels. Saving fell as growth in household consumption outpaced the rise in gross disposable income.
Gross disposable income rose 1.0 percent in the quarter. Compensation of employees rose 1.5 percent, reflecting increases in employment and hours worked as economic activity continued to recover. This was partly offset by a decline in benefit payments as additional COVID-19 support wound back.