Australia’s economy logged its strongest annual growth in nearly two years during the second quarter, driven largely by a resurgence in household spending as consumers became more confident after an extended period of restraint. With the boost from private consumption, the primary engine of expansion shifted from public to private hands.
Recent data from the Australian Bureau of Statistics indicated that GDP expanded by 0.6% in the second quarter, surpassing expectations and building on a 0.3% increase in the previous period.
On an annual basis, the economy grew by 1.8%, up from 1.4% earlier this year – the fastest pace in almost twenty-four months, though still below the average growth of 2.5% seen in previous years.
Private consumption was a standout, advancing by 0.9% – with discretionary spending on items such as furniture, household equipment, vehicles, and leisure goods providing much of the momentum. This shift saw households save less, with the savings rate falling to 4.2% from 5.2%, as many took advantage of seasonal sales events and holiday breaks to accelerate spending.
Government expenditure, previously a significant support for growth through investments in infrastructure and health, contributed little this quarter, while business investment also remained subdued.
The Reserve Bank of Australia eased its benchmark interest rate three times since February, bringing it down to 3.6%, as inflationary pressures have eased. Financial markets are now anticipating another reduction in rates as soon as November.
The GDP performance exceeded the central bank’s own forecasts for full-year growth, which stand at 1.7%. The RBA, maintaining a cautious approach to loosening policy further, has only adjusted rates in response to quarterly inflation data.
Labour market trends remain under scrutiny, as hiring has moderated slightly from earlier high levels of employment. The jobless rate moved lower from a recent 3.5-year peak in July, helping allay concerns about a sharp deterioration in employment conditions.
On a per capita basis, economic output rebounded, rising by 0.2% for the quarter after having slipped into contraction in the previous three months.
