Australian economic growth has picked up, growing by 3.4% year on year (3.1% in Q1), the fastest pace since September 2012.
On a quarterly basis GDP was up 0.9% (1.1% in Q1, upwardly revised, as well as Q3 and Q4 2017).
Domestic demand growth (up 0.6% qoq) accounted for more than half of total GDP growth.
Major contributor was consumer spending (up 0.7% over the quarter, 3% in annual terms, contribution 0.4%) with increased expenditure on both discretionary and non-discretionary goods and services. The household sector, under pressure due to subdued wage growth and falling housing prices, likely financed spending by using savings (household savings rate declined to just 1%, a low since 2007, with spending up 0,9% and disposable income up only 0.4%).
Residential construction was also another strong contributor. Investment in new dwellings moved up to 3.6% in the quarter. This strength was reflected in the Construction industry, up 1.9% in Q2.
Net exports contributed a more modest 0.2% (main driver in Q1).
Government consumption was stronger (1% qoq) up 5.1% in FY 2018, due to elevated levels of public investment, reflecting infrastructure projects across the nation.
Mining investment was up 5.1% qoq (first time since Q1 2017, in fact in yoy terms it is down 9.7%), driven by capital investment on machinery and equipment by mining firms and an increase in petroleum exploration expenditure.
Non-mining investment decreased 2.4% in Q2, driven by machinery and equipment, likely a payback from strong growth in the previous quarter. Non-mining investment is up 17.7% through the year.