Australia has retained its position as one of the globe's fastest growing developed economies with new figures showing the economy grew another 0.6 per cent in the June quarter.
The Australian Bureau of Statistics reported this morning that through the 2011-12 financial year the economy grew by 3.7 per cent.
The Federal budget was based on the economy expanding by 3 per cent.
Household consumption, exports and government spending all contributed to growth through the quarter. The major reductions in growth flowed from business inventories and the slowdown in residential building.
Wholesale trade, transport and professional and scientific and technical services were the main industries to add to growth.
Mining and manufacturing detracted from growth. The fall in mining was partly tied to the 0.6 per cent drop in the nation's terms of trade through the quarter.
WA's State final demand grew by 2.1 per cent to be 15.9 per cent larger over the past year
However, the fastest growing part of the country was the Northern Territory, where State final demand exploded by 12.5 per cent in the quarter to be 32.3 per cent larger over the year.
There were also solid contributions from both Queensland and NSW.
The household saving ratio stayed steady at 9.2 per cent as consumers continue to adjust their spending habits.
All measures of productivity grew through the quarter to be up by more than two per cent over the past year.
There are also signs that the profitability of corporate Australia is taking a hit.
The gross operating surplus as a share of GDP fell to its lowest level since mid-2008.
It was the 21st consecutive year of economic growth, the only developed nation in the world that can make that boast.
CommSec chief economist Craig James said it is the longest economic expansion in Australia’s history, with the last recession having ended in 1991.
“While the record-breaking performance is of little practical benefit for many sections of the economy, it does provide a boost to consumer and business confidence,” he said.
“We expect another year when economic growth is more likely to be in line with longer-term averages or slightly above, rather than something approaching the below-average outcomes from 2009-2011.”
Mr James said the highest contribution to economic growth came from exports, followed by household spending and government consumption.
He expects growth to stay solid for the 2011-12 financial year, with an annual rate of about 3.5 per cent.
“Business investment in resource sectors should again be the mainstay of growth, but dwelling construction is expected to lift from depressed levels and household spending should continue to grow.”
Treasurer Wayne Swan hailed the 21 years of growth as a stunning result.
Australia’s 21 years of growth was “like winning 21 premierships in a row and winning the last four very, very comfortably“, he told reporters.
Mr Swan said the national accounts reaffirmed Australia’s position as one of the strongest economies in the world and shone a light on the nation’s resilience in the face of significant international headwinds.
He said less demand for Australia’s mineral exports had pushed down commodity prices by more than anticipated in the federal budget, released in May.
“Obviously, there would be a further hit to the budget bottom line if these lower prices were sustained,” he said.
However, RBC Capital Markets senior economist Su-Ling Ong said Tuesday’s figures showed an easing in the national income that was likely to continue into the second half of 2012.
She said the June quarter GDP was helped by the government payments to compensate for the introduction of the carbon tax.
“Today’s national accounts confirm our view that 2012 will be a tale of two halves despite our forecast of a decent three per cent GDP for the year,” she said.
“More timely indicators hint at a poor start to third quarter GDP with some payback likely in household consumption.”
Ms Ong said there is further scope for the Reserve Bank of Australia to cut the cash rate from its current level of 3.5 per cent.
“We expect the disappointing global growth backdrop and likely renewed stress in global credit markets to be a key factor in underpinning further cuts,” she said.