National Economy

National economy

Trends - After the swings of COVID during 2022, the national economy returned to a more normal and targeted level of growth of around 2% per annum.

Latest - The latest data points show a 0.4% growth for each of the first two quarters of 2023, down from a 0.7% growth for the last quarter of 2022.

At the national level, ABS data shows a quarterly rise in GDP of 0.4% for the second quarter of 2023, continuing previous quarter’s trend. GDP per capita fell 0.3% due to an uptick in migration post-COVID. The ABS Australian National Accounts: National Income, Expenditure and Product highlight the following points:

  • Domestic demand has remained strong and been a primary upward driver of growth, providing a 0.7% increase in the quarter.
  • Capital investment was the strongest contributor to domestic demand, providing a 0.5% point contribution to GDP growth.
  • Public investment increased by 8.2%. New machinery and equipment including motor vehicles was the biggest contributor.
  • Consumption expenditure had a subdued 0.1% impact on GDP. There is an increasing shift away from discretionary expenditure to essential goods and services.
  • Net trade was an upward driver this quarter due to exports increasing faster than imports. There was a 4.3% rise in exports, offsetting a 0.7% increase in imports. This was the opposite case in the previous quarter.

Prices of traded commodities, especially rural goods, liquified natural gas and coal, have been falling is having a large impact on profits for the mining industry. Domestic prices have been rising strongly, mainly due to a tight labour market, fuelling price increases in services. (See ABS for more info)

NSW business performance

The NAB Group Economics update for August 2023 shows:

  • Business conditions rose in August both for NSW and Australia. While down from earlier peaks, resilience was maintained throughout the middle of the year. Trading conditions, profitability and employment conditions also rose.
  • Business conditions at both state and national levels are measuring above long-run averages. Capacity utilisation was above 85%, reflecting a tight balance between supply and demand.
  • Business confidence measures are more mixed. While both state and national levels have recovered from negative values they both remain below long-run averages. Of relevance for the Hunter is the marked change in business confidence in the mining sector from high positive values earlier in the year to negative values in the last update. Manufacturing, construction, transport, and utilities sectors are still in positive territory.
  • The retail sector is the largest negative weight on business confidence, and part of the result is due to clearing of backlogs. This result also applied to sales and forward orders.

Data source: NAB Group Economics

NSW household spending

The ABS Monthly Household Spending Indicator from August 2023 for New South Wales indicates:

  • An increase in household spending of +2.9% compared to August 2022 in current prices.
  • An increase in spending on services of +6.4% and a decrease on goods of -1.0% since August 2022.
  • An increase in non-discretionary expenditure of 7.2% with a fall for discretionary expenditure of -1.6%.

Prices have stabilised compared to the large increases seen in the previous 12-24 months. In the July quarter, the consumer price index rose 0.8%, topping off a 12-month rise of 6%. This is down from a peak of near 8% in December 2022. While previously food and electricity prices drove the major overall increase in the index, rents and international holidays are now the primary drivers.