Treasurer Josh Frydenberg says the economy is recovering well from the pandemic recession.Credit:Alex Ellinghausen
That fed through to extra activity in wholesale trade (up by 3.6 per cent) and transport (6.1 per cent). Rural exports also jumped by 23.5 per cent.
There was a rebound in the hospitality and arts and recreation sectors as pandemic restrictions were lifted. Despite this,annual activity across hospitality is down by 13.2 per cent while for arts and recreation it has suffered an 8.2 per cent drop.
Private investment jumped by 3.9 per cent,contributing 0.7 percentage points to the quarterly growth result. Government initiatives such as HomeBuilder and the expanded instant asset write-off contributed to the lift.
Nominal GDP,pivotal to the federal budget,jumped by 4.2 per cent thanks in part to strong terms of trade. The nominal economy has now recovered to its pre-virus level,suggesting better revenues for the federal government.
While consumer spending increased,household income actually fell as non-labour income programs fell due to a reduction in government support payments.
Households are still sitting on large amounts of cash,which the government hopes will cushion the economy over coming months. The household savings ratio dropped 6.7 percentage points to 12 per cent.
ANZ senior economist Felicity Emmett said the figures showed an economy strongly on the mend.
“The economy has weathered the withdrawal of large amounts of fiscal stimulus with aplomb. Uncertainties remain but should be seen in the context of the much better-than-expected position the economy is now in,” she said.
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BIS Oxford Economics chief economist Sarah Hunter said every state other than NSW and Victoria had completed the “recovery phase” and were back to pre-pandemic levels with stimulus policies helping to offset the ongoing international border closure.
“Looking ahead,the pace of growth will slow given the initial burst of the recovery is now over,” she said.
Despite the recovery,total Australian economic output through 2020 was 2.4 per cent or $48 billion lower than through all of 2019.
But Deloitte Access Economics principal economist Doug Ross said the recovery had been “gobsmacking”,noting real national income was 2 per cent up over the past year.
That was being driven by higher prices for key commodities such as iron ore and the collapse in global interest rates which had reduced the nation’s interest bill.