No recession — for now — as economy grows in June quarter

Contrary to fears of a recession now underway, the economy grew strongly in the June quarter, today’s national accounts figures from the Australian Bureau of Statistics show.

The economy grew 0.7% in seasonally adjusted terms, fuelled by continuing household spending and public sector investment in an outcome mainly of historical interest given the devastation wrought in the current quarter by the New South Wales outbreak.

The ABS says private demand contributed 1.0 points to the result off the back of a 1.1% increase in household spending, particularly on services.

As expected, a welcome lift in private investment also increased the final result, along with housing investment. Public demand contributed 0.7 points to growth, mainly from spending on state and local infrastructure projects and — unsurprisingly — strong health spending.

Despite record terms of trade — up 7% in the quarter and 24.1% across the year — net trade actually detracted from growth due to disruptions to coal production and transport of iron ore.

The numbers are testament to the resilience of Australian households, the commitment of governments to continuing deficit spending (outside Western Australia) and the Reserve Bank’s commitment to shoring up financial stability and low interest rates — which prompted businesses to open up their balance sheets and start spending.

But today’s figure will be the best we’ll see in some time. A crisis arrived at the end of June shows no signs of ending, with just 29 days left in the current quarter.