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(Australian Associated Press)
HOW STRONG IS THE ECONOMY?
* The Australian economy grew in the year to June at its fastest annual pace in nearly six years, when the nation was reaping the benefits of the mining boom.
* National accounts data released on Wednesday showed the economy expanded by 0.9 per cent in the June quarter and 3.4 per cent over the 12 months to June, on a seasonally adjusted basis. This exceeded economists’ expectations.
WHAT’S DRIVING THE STRENGTH?
* Household spending was a major contributor to growth in the quarter, up by 0.6 per cent. This pushed domestic demand 0.7 per cent higher. Treasurer Josh Frydenberg says it’s due to more people in work.
* Among other drivers was investment in new dwellings, which was up 1.7 per cent in the quarter and 3.8 per cent over the year. Such investment was particularly strong in Victoria and South Australia. The construction industry grew by 1.9 per cent in the quarter.
* Government spending was also up by 1.0 per cent in the quarter as work on infrastructure projects nationally remains high and compensation of employees was up 0.7 per cent due to the rise in the number of people with wages and salaries.
* Economists had thought the drought would weigh on results but farm GDP was up 1.1 per cent in the quarter, though down 9.7 per cent over the year.
WHY AREN’T I FEELING THE BENEFITS?
* The figures suggest that while Australians are spending more, they are saving less. The household savings rate fell to 1.0 per cent in the June quarter, down from 1.6 per cent in the three months to March.
* Labor has been quick to suggest this means people are diving into their savings to fuel their spending, as it feels like the price of everything is going up except their wages.
WHAT DOES THE GROWTH MEAN?
* If economic growth remains strong, wages can be expected to go up, the Treasurer says.
* A strong economy also means being better able to fund government services such as the National Disability Insurance Scheme.