Private demand emerges
Real GDP growth came in at a slightly underwhelming 0.6 per cent for the December quarter, with a little boost from net exports and some more growth in government spending.
The Aussie economy grew by a pretty sluggish 1.3 per cent over the year, and productivity took a disappointing downturn in today's figures.
Public investment rose 1.8 per cent in the December quarter, and this quarter private demand finally did contribute to growth, rising by 0.4 per cent.
Public spending now represents a record share of GDP, according to Westpac's analysis.
You only have to look at the change in employment by occupation over the past 5 years to see where much of the economic growth has been coming from (healthcare, social assistance, and the rapidly burgeoning NDIS government disability scheme):
Having previously declined for seven consecutive quarters, GDP per capita gratefully eked out a seasonally adjusted increase of 0.1 per cent.
Although this figure may be revised down later, it does at first blush appear to be the end of the per capita recession, albeit GDP per capita remains 1½ per cent below its highs.
Nominal GDP (i.e. in current prices) increased by 1.6 per cent to a new record high, with export prices getting a boost in the December quarter.
After an unusual few years to say the least, it seems that other income measures in the economy have broadly been flat over the past 18 months.
Australia's terms of trade got a little fillip in the December quarter, with the lower Aussie dollar helping to lift export prices for iron ore, LNG, and rural goods.
However, the crude oil price is now since down by more than 15 per cent from their highs at under $68, and coal prices have since crashed to multi-year lows, so the trend for the terms of trade is more than likely going to remain down.
Finally, a look at households.
The household saving ratio picked up to the highest level since the September 2022 quarter at 3.8 per cent as incomes increased through the calendar year.
There should be a bit of a tailwind for households from falling interest rates in 2025, with 2024 having seen a steepling level of mortgage interest paid to lenders.
The wrap
Overall, it was heartening to see the seemingly endless declines in GDP per capita arrested in the final quarter of 2024, even if it was only a tiny gain provisionally recorded.
Households are set to get some respite on their mortgage repayments in 2025 as more competitive mortgage rates are gradually offered by lenders, but only a steady pick-up in consumption spending is anticipated by most economists.
Dwelling investment was weak again in the December quarter, but should pick up from this calendar year as interest rates are lowered and as developers scramble to tackle the housing shortage.
There has been much debate about whether high levels of government spending and population growth have been justified, given that housing rents and cost of living pressures have been acute.
But, at least unemployment has remained low, and the economy has kept growing...
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