Today's National Accounts show that the Australian economy grew by 2.7 per cent in calendar year 2018, consistent with trend growth. For the December quarter 2018, real GDP grew by 0.2 per cent, within the range of market expectations.
Australia continues to grow faster than all of the G7 nations except the United States.
With the unemployment rate at its lowest level in seven years, growth in government spending at its lowest level in 50 years and the proportion of working age Australians on welfare at its lowest level in 30 years, our economic foundations are in good shape. We are on track to record our 28th consecutive year of economic growth.
Nominal GDP continues to be strong, growing by 1.2 per cent in the quarter to be 5.5 per cent higher through the year, benefitting in part from an increase in the terms of trade. The terms of trade is up 3.1 per cent in the quarter and 6.0 per cent through the year.
Importantly, real net national disposable income per capita was up 0.8 per cent and 2.1 per cent through the year, faster than the 20 year average of 1.7 per cent.
Household consumption continued to contribute to growth in the economy, growing by 0.4 per cent in the quarter and by 2.0 per cent through the year, with 12 of the 17 consumption categories recording growth.
Households are benefiting from solid gains in compensation of employees, which measures the national wage and salary bill, increasing by 0.9 per cent in the December quarter to be 4.3 per cent higher through the year – higher than the five year average growth rate of 3.4 per cent.
Improving the incomes of wage and salary earners remains a core focus, with the Government already providing tax cuts to 95 per cent of taxpayers.
Average earnings in the National Accounts increased by 0.5 per cent in the quarter to be 1.7 per cent higher through the year, an increase from the 1.5 per cent through the year results recorded in the September quarter. This comes off the back of a 2.3 per cent rise in the Wage Price Index for the December quarter, the equal fastest rate in three years.
Wages can be expected to rise further as strength in labour market conditions continues.
Net exports detracted 0.2 percentage points from growth in the quarter, with exports falling 0.7 per cent in the quarter due in part to the impact of the drought. Farm GDP fell by 5.8 per cent through the year, with the Australian Bureau of Statistics noting that drought conditions also affected food manufacturing in the December quarter.
Exports continue to make an important contribution to Australia's economy, being 4.7 per cent higher through the year. This was driven by strength in services exports as strong demand for tourism and education services continues.
Company profits increased by 3.2 per cent in the quarter to be 9.8 per cent higher through the year, largely reflecting strength in mining output and commodity prices. Commercially viable and profitable companies are critical to job creation and the health of the Australian economy, particularly given almost nine out of ten jobs are in the private sector.
With the unemployment rate at 5.0 per cent, 1.2 million jobs created since the Coalition came to government and new opportunities for businesses being created through Free Trade Agreements, it is now more important than ever for Australia to stay the course with the Government's economic plan of lower taxes, more trade and record spending on infrastructure.
A plan which is delivering more jobs, a stronger economy, a Budget which will be in surplus and the essential services that people rely on.