That's the highest the household savings ratio has been since September 2022.
Australia's overall Gross Domestic Product rose 1.3% through 2024, with strong immigration numbers making the economy look less lethargic.
Government spending also continues to be a big driver of growth, up 0.7% through the quarter and 5.1% year on year compared to 0.4% q/q and 0.7% annually for households.
Nevertheless, household spending still was a greater contributor to overall consumption growth during the quarter, with discretionary spending also up 0.4%,
The 0.1% quarterly growth to GDP per capita is the first time since December 2022 that number has been positive, an encouraging sign that the RBA may not have squeezed too hard.
It wasn't all good news though, with GDP per hour worked, the key measure of labour productivity, declining another 0.1% through the quarter, a figure in which the RBA will likely pay particular attention.
Forthcoming rate cuts less likely?
The 1.3% annual GDP growth is significantly above the 1.1% predicted by the RBA in the most recent statement on monetary policy, but below forecasts from the major banks' economics teams.
With the unemployment rate also below forecast, the economy looks to be in better shape than expected, especially given the increase in the percentage of income households are managing to save.
Discretionary spending grew 0.4%, although the ABS has pointed to 'strong promotional activity' around Black Friday and Cyber Monday as an explanation - cost of living pressures and high rates might have led to an unusual surge in people shopping the sales for things like furniture.
However in previous iterations of retail trade results, statisticians have noted Australians might feel more confident to spend off the back of cost-of-living relief measures such as electricity rebates.
For the economists who criticised the RBA's decision to cut in February, the numbers could be more ammunition to back up the theory that monetary policy needed to stay more restrictive to bring down inflation.
Prices rose about 2.5% over the 12 months to January, but the quarterly figures are considered much more definitive - we won't find out the numbers for the March quarter until 30 April.
Given the 'hawkish' tone most people read into RBA governor Michele Bullock's rhetoric surrounding the February cut, it now looks increasingly unlikely there will be another cut at least until that information is released, which would mean no more cuts until after the election.
Productivity concerns growing?
GDP per hour worked declined 0.1% over the December quarter, down 1.2% through the calendar year, taking the index to its lowest point since June 2019.
Weak productivity can hurt supply capacity, which can be inflationary, and while harsh to point out, also might be contributing to the low unemployment rate.
In the long run, productivity also tends to be necessary to support real wage growth, so it's been a persistent concern the RBA has regularly pointed to over the past couple of years.
However, the 1.2% annual decline is still well below the -1.9% forecast in the Statement on Monetary Policy which likely means this latest result won't set off too many alarm bells yet.
The SOMP expects annual labour productivity to increase 0.7% over 2025, so policy makers will look to see a substantial pick up this year in how efficiently Australian workers are producing goods and services.
Picture by Graham Holtshausen on Unsplash
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