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Australia's gross domestic product gained a seasonally adjusted 3.1 percent on quarter in the fourth quarter of 2020, the Australian Bureau of Statistics said on Wednesday.
That beat forecasts for an increase of 2.5 percent following the upwardly revised 3.4 percent gain in the previous three months (originally 3.3 percent).
On a yearly basis, GDP was down 1.1 percent - again exceeding expectations for a decline of 1.8 percent after sinking 3.8 percent in the three months prior.
Capital expenditure was up 3.6 percent on quarter after slipping 0.1 percent in Q3. The GDP deflator gained 1.1 percent on quarter, accelerating from 0.6 percent in the previous quarter.
The terms of trade rose 4.7 percent this quarter off the back of higher export prices, particularly for iron ore. The strength in the terms of trade contributed to a 4.2 percent increase in nominal GDP, the strongest rise since September quarter 1983.
Domestic final demand contributed 3.2 percentage points to GDP growth. Household final consumption expenditure contributed 2.3 percentage points as constraints on households and businesses continued to lift. Private investment contributed a further 0.7 percentage points to growth.
Spending by households rose 4.3 percent this quarter but remained 2.7 percent down through the year.
Spending on goods rose 2.8 percent for the quarter and is up 6.2 percent through the year. Purchase of vehicles rose a record 31.8 percent, reflecting elevated household disposable income and shifting spending patterns with continued limitations on some expenditure items such as international travel.
Spending on services rose 5.2 percent. This reflects a partial recovery with spending down 7.8 percent through the year. Recreation and culture, hotels, cafes and restaurants and health all continued to rebound as movement and trading restrictions eased.
Household spending by Victorians increased 10.4 percent as strict lockdown restrictions were lifted. The level of spending remains weak at 7.2 percent below its pre-COVID level.
Household spending for the rest of Australia, excluding Victoria, rose 2.3 percent in the quarter.
The household saving to income ratio declined to 12.0 percent from 18.7 percent last quarter, remaining at elevated levels. Falls in gross disposable income and increases in household consumption both contributed to the decline in saving.
Gross disposable income fell 3.1 percent in the quarter but remained strong through the year (up 4.8 percent). The quarterly fall reflected a decline in government support payments.
Private investment rose 3.9 percent for the quarter. Both housing and business investment increased, supported by government initiatives and improvements in conditions.
Ownership transfer costs (15.2 percent) and dwelling investment (4.1 percent) both contributed to the increase in housing activity. The rise in business investment was driven by a 8.9 percent increase in machinery and equipment.
