The Australian economy has grown at 0.6 per cent in the last quarter, and by 1.8 per cent annually, driven by rising household and government spending.

The figures published by the Australian Bureau of Statistics (ABS) today showed stronger activity than the 0.5 per cent quarterly growth that the Reserve Bank and economists had anticipated, following the weak 0.3 per cent results in the March quarter due to impacts from Tropical Cyclone Alfred.

“Economic growth rebounded in the June quarter following subdued growth in the March quarter, which was heavily impacted by weather events,” ABS head of national accounts Tom Lay said. 

The ABS said the 0.9 per cent rise in household spending and 1 per cent increase in government spending were the main drivers of the strong quarter.

Household spending was lifted by Australians extending their holiday breaks from Easter to Anzac Day — which fell on the same week this year — end-of-financial-year sales, and increased demand for medical services due to the particularly strong flu season.

“End of financial year sales and new product releases contributed to rises in discretionary spending on goods including furnishings and household equipment, motor vehicles and recreation and culture goods,” Lay said.

“Households took advantage of the proximity of Easter to Anzac Day to extend their holiday break, resulting in rises in discretionary services such as hotels, cafes and restaurants and recreation and culture services.”

Australians also bought more food as major supermarket chains, including Coles and Woolworths, increased their promotional sales.

The Albanese government’s spending, excluding defence investments and including costs like holding the federal election in May, was the largest contributor to growth.

High demand for health services also led to more spending on the Medicare Benefits Schedule and the Pharmaceutical Benefits Scheme.

Trade also increased on the back of iron ore and LNG export rebound after the effects of severe weather in the March quarter.

A rise in short-term visitors, particularly those visiting friends and family in Australia, led to an increase in service exports.

Private investment remained relatively unchanged, increasing 0.1 per cent in the June quarter.

The ABS said the largest detractor from growth was the 3.9 per cent decrease in public investment — the largest fall, excluding the COVID-19 period, since September 2017.

This was due to state and territory governments spending less on transport and health infrastructure.

Treasurer Jim Chalmers said today’s results were equal to the fastest quarterly growth in almost three years and the fastest annual growth rate in almost two years. 

“Today’s National Accounts show Australia’s economy is gathering momentum in the face of global economic uncertainty,” he said.

But experts questioned the treasurer’s optimism. 

CreditorWatch chief economist Ivan Colhoun said the figures were largely driven by temporary factors like the weather events last quarter, federal election spending and end-of-financial-year sales.

“At face value, this outcome could be seen as confirming the RBA’s anticipated strengthening in economic growth, though I’m not so sure about that,” he said.

“There was a host of special factors impacting the data this quarter, most of which acted to boost growth temporarily.”

Oxford Economics Australia head of macroeconomic forecasting Sean Langcake said while the results were “encouraging confirmation” that worse global uncertainty did not have a heavy toll on the economy, it may be a “high watermark” for growth this year.

“The June quarter benefited from a rebound from a soft first quarter, business and consumer confidence are still a little shaky, and the labour market appears to be cooling,” he said.