7 March 2018
Media Release - #2018018, 2018

National Accounts – December quarter 2017

Today's National Accounts reveals the continued resilience of Australia's domestic economy, with Australians backing themselves, getting jobs, spending more and investing more.

It also highlights that we are not immune to what else is happening in the world.

But like most Australians I am optimistic, and I have good cause for it.

2017 was the year of jobs. More than 1,100 jobs created every single day – the strongest on record.

This eclipses even the best year of previous governments - 282,500 under Rudd -Gillard-Rudd, 324,900 under Howard and 308,500 under Hawke and Keating. 2017 was a record year for jobs, whichever way you want to cut it.

Getting Australians into work has obviously had a great impact on our economy.

Today's figures show growth was supported by consumption up 1.0 per cent for the quarter and what we are paid, compensation of employees, up almost five percent through the year.

The growth in jobs has been predominately driven by non-mining sector businesses, investing and expanding, taking advantage of the best reported business conditions on record.

We need them to keep doing this and that is why we need to lower taxes to remain competitive.

This growth in jobs has also been supported by the Government getting on with the job on infrastructure development and delivering the key services that Australians rely on.

Looking more specifically at the figures, economic growth was 0.4 per cent in the quarter and 2.4 per cent through the year. This is on track with the economic outlook we provided at the mid-year update.

But the better news can be seen when you look beyond the top line numbers.

Growth was driven by consumption which rebounded to 1.0 per cent for the quarter. This was the best December quarter consumption outcome since 2010, and was substantially up from the revised 0.5 per cent seen in the September quarter.

Through the year consumption growth was up 2.9 per cent and this reflects the strength in consumer confidence we have been seeing now for some time.

In addition, this is also demonstrated by the pick up spending on discretionary items with some of this supported by events held in the quarter such as the Rugby League World Cup.

Under the Government's National Economic Plan, businesses are enjoying some of the best business conditions on record, and are investing in their future with more confidence.

While new private business investment declined by 1.0 per cent in the quarter, it continues to grow at 5.8 per cent through the year - above the 20-year average.

However, again, looking beyond the top line, Treasury estimates that new non-mining business investment was up 2.1 per cent in the quarter and 12.4 per cent through the year.

This is a result of the strong growth in new machinery and equipment investment which was up 3.0 per cent in the quarter. This represents the fourth consecutive quarter of growth.

New machinery and equipment investment has lifted from a through-the-year decline of 10.7 per cent just over two years ago, to a positive growth rate of 8.4 per cent today. This is the highest through-the-year growth rate since the June quarter 2012.

The drag on business investment has come from the decline in engineering construction which is a function of the wind down of the construction phase of the major LNG projects.

New public demand remained strong with continued infrastructure spending by the States - supported by the Commonwealth Government's infrastructure program. There was also growth in government spending on essentials such as rolling out the NDIS, aged care and the PBS.

Net export outcomes were the main drag on the quarter's accounts. This highlights the need to keep focussed on fighting for access to international market. The numbers also reflect the come down from the bumper crops in agriculture and motor vehicle exports with the plant closures now taking effect.

On the income side, compensation of employees rose again - up 1.1 per cent for the quarter and 4.8 per cent through the year. It is important to note that one third of the through the year increase was driven by average wages, and the remainder by employment growth.

Growth in company profits during the quarter were more modest at 0.9 per cent and up 5.0 per cent for the year, down from their commodity price driven growth shock of 12.1 per cent in the December quarter a year ago which led to a through the year increase of more than 20 per cent in the following quarter.

We warned at the time that results should not be taken as indicative.

All of this has translated into a slight uptick in the saving ratio and a further improvement in gross household disposable income - up 1.6 per cent in the quarter and 3.0 per cent through the year.

Overall a very sound set of numbers, revealing the increasing confidence that is present, but still needs to be built upon, to realise the opportunities that are ahead.

We have a clear National Economic Plan to drive jobs and growth. It's getting results as you can see. We need to stay the course and stick to the plan.

Which is exactly what we intend to do to secure the future for all Australians.