The national accounts released today showed the Australian economy in the June Quarter expanded by a solid 0.9% and 3.6% YoY. It's the third consecutive quarter of economic expansion for the Australian economy.
The first full quarter of re-opened domestic and international borders was behind a substantial rise in consumer spending and net export growth, offsetting weakness in housing and inventories.
Drilling down into the details, household spending rose by 2.2% as spending on services increased 3.6%, exceeding pre-pandemic levels for the first time. Hotels, cafes, and restaurants (+8.8%), transport services (+37.3%) and recreation and culture (+3.6%) were the main drivers.
Exports of goods and services contributed 1.1 percentage points to GDP growth. The rises were broad-based across rural and mining goods and services exports. Exports of services rose 13.7%, reflecting education-related travel as international students returned to Australia.
Australia's Terms of Trade rose 4.6% during the quarter, contributing 1.0 percentage points to GDP growth, driven by a strong rise in exports (+5.5%), while imports recorded a partly offsetting rise (+0.7%).
Following an unprecedented inventory build-up of $7.8 billion in March, changes in inventories recorded a more moderate build-up of $1.6 billion this quarter, detracting 1.2 percentage points from GDP growth.
Ongoing disruption in the building industry stemming from wet weather and material and labour shortages saw a 2.9% fall in Dwelling activity, following a 4.6% fall in Q1. Non-residential fell by 5% following a 2% fall in Q1.
The household saving ratio declined from 11.1% to 8.7% remaining slightly above pre-pandemic levels but a long way from the 19.8% level it reached in Q3 2021. The fall in the savings rate coming as consumers continue to open their wallets, shop up a storm, and travel abroad.
Today's figures coincided with the start of the RBA's rate hiking cycle in May and come just one day after the RBA raised rates by 50bps to 2.35%, leaving Q3 as the one that should reveal the impact of the RBA's 225bp of rate hikes to date.
While the statement that accompanied yesterday's decision hinted at a more moderate pace of rate rises, more clues may be forthcoming from the RBA Governors' Speech at the Annika Foundation lunch tomorrow.
What does it mean for the AUDUSD?
Following the failure to break above resistance at .6850/70 earlier this week, the AUDUSD is lurching towards the June .6681 low, unable to withstand the heat of an unrelenting rise in the U.S dollar and in USDCNY.
A break/close below .6681 would then see the AUDUSD move towards the next level of support, .6530/00.
Source Tradingview. The figures stated are as of 7th of Sept 2022. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation