Sydney Morning Herald 2 September 2010

Australia's "miracle economy" surprised on the upside again with the June quarter national accounts, beating economists' forecasts with seasonally adjusted gross domestic product growth of 1.2 per cent on the back of surging terms of trade, household spending and the construction industry. And the amazing thing is that the mining industry has a relatively quiet quarter, so there's much more to come.

The June quarter performance gave us economic growth of 3.3 per cent through the 2009-10 financial year – more than anyone dared hope. The tipsters can try to save some face by noting that their consensus forecast of 0.9 per cent matched the Australian Bureau of Statistics' trend series result – a less volatile and more reliable figure.

Seasonally adjusted, the Australian economy is in very solid shape, sailing out of the developed world's Great Recession with growth around its trend rate, with the terms of trade pouring money into the national coffers as shown by gross national income soaring 4 per cent, and with the promise of a further surge in private capital investment this financial year.

Making up that 1.2 per cent growth, household expenditure had the biggest positive impact with 0.9 per cent, followed by net exports with 0.4 per cent as the terms of trade jumped 12.5 per cent seasonally adjusted, 14.4 per cent in trend terms. Taking 0.7 per cent off the growth figure was a run down in inventories – a factor that might reasonably be reversed as confidence builds.

The industry that contributed most to GDP was construction – all those school sheds helping to add 0.3 per cent to GDP. Mining and "professional, scientific and technical services" each contributed 0.1 per cent.