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Australia’s gross domestic product (GDP) rose 0.6 per cent in the December quarter of 2024 and 1.3 per cent for the year, according to figures released today by the Australian Bureau of Statistics (ABS).
Katherine Keenan, ABS head of national accounts, said: “Modest growth was seen broadly across the economy this quarter. Both public and private spending contributed to the growth, supported by a rise in exports of goods and services.”
GDP per capita grew by 0.1 per cent this quarter, following seven consecutive quarters of declines.
Household spending increased by 0.4 per cent in the December quarter, after a flat result in the September quarter.
Spending on essentials such as rent and health continued to be one of the highest contributors to household spending growth.
Electricity rebates continued this quarter, helping keep household spending on electricity, gas, and other fuels down.
“Household discretionary spending rose as people made the most of retail sales events and increased spending on hospitality as they enjoyed music and sporting events,” Keenan said.
The household savings ratio rose modestly to 3.8 per cent in the December quarter, up from 3.6 per cent in the September quarter.
Gross disposable income of households grew as income received rose, which was only partially offset by an increase in income payable.
The rise in income received was driven by higher earnings from compensation of employees, household income from dwellings, and interest received.
However, lower dividends received by households partially offset the rise. There was also offsetting growth in income payable, led by an increase in income tax and interest paid on dwellings.
Home loan market and RBA implications
Reacting to the figures, FirstPoint Mortgage Brokers’ director Troy Phillips told Broker Daily that the data “all reads well”.
“It was released prior to [the Federal election] and there was a rate cut it got lost in. I think I’d like to see the next set of numbers post-federal election. At the moment, on paper, it’s a good sign and Australians are the ones getting that in order,” Phillips said.
“But it [still] means a lot of people are doing it tough.”
Should growth continue throughout 2025, Phillips said that this should translate into a more active home loan market.
“The refinance market is down quite considerably, I think if we see a couple of sets of [strong quarterly numbers] we’re going to see some buyers coming back in the market. We may even see some investors coming back into the market for the first time in a while,” he said.
Head of Australian economics for the Commonwealth Bank of Australia (CBA), Gareth Aird, said this quarter’s growth was “a little stronger overall than the RBA anticipated”, although household consumption was in line with the central bank’s forecast.
“The RBA forecasts household consumption to accelerate to 2.6 per cent/qtr by the end of 2025 imply the quarterly pulse must rise to 0.6-0.7 per cent/qtr. That looks a stretch to use without the cash rate being taken lower by another 75 basis points over the year,” Aird said.
“In the near-term labour market and inflation data will be critical to the timing of the RBA’s next policy move given we don’t see [the] national accounts as shifting the dial one way or the other for the board.
“Our base case sees the RBA hold at the April board meeting. And we expect the RBA to cut the cash rate by 25 basis points at the May board meeting.”
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