Good 360
NEWS  | 

Economic Growth a Positive Sign for Christmas Donations

Wednesday, 14th December 2011 at 2:37 pm
Staff Reporter
Growth in Australia’s household incomes – and a subsequent rise in household savings – may see donation flows pick up following the GFC, according to Commonwealth Bank economist James McIntyre.

Wednesday, 14th December 2011
at 2:37 pm
Staff Reporter



Economic Growth a Positive Sign for Christmas Donations
Wednesday, 14th December 2011 at 2:37 pm

This article is by Commonwealth Bank economist James McIntyre is part of a regular series of articles by the Commonwealth Bank, who will be using their financial experts to provide news, insight and expert advice for Not for Profit organisations.

The latest figures on the economy are in. Australia’s GDP grew by 1.0% in the September quarter, as the economy regained momentum from the impacts of natural disasters over the summer. The economy was 2.5% larger than a year ago.

Whilst the overall outcome is positive one, information on the state of household spending and finances is likely to be the main piece of news relevant for Not for Profits.

The latest figures show that household incomes continued to grow solidly in the third quarter. Household disposable incomes grew 2.4% in the quarter, and are nearly 7% higher than a year ago.

Strong household income growth has enabled the household sector to continue to save, and increase spending at the same time.

The household savings ratio rose from 9.1% to 10.1% in QIII. Households have continued to save at their highest rate of income since the early 1980s. The benefit is that the level of higher savings is helping households to reduce their debts and increase their rainy day buffers. The amount of income households are devoting to debt servicing has fallen and remains below pre-GFC levels. Slower growth in debt (courtesy of higher savings) and lower interest rates should ease some of the stress on household budgets from interest costs.

But it is too early to declare that households have fully recovered from the GFC. Household wealth levels remain subdued, and it is likely that the high savings ratio will continue for some time until household balance sheets have been repaired. However, a stable, albeit elevated, savings ratio means that spending is likely to grow in line with income growth. If household income growth holds up, donation flows may pick up, benefitting the NFP sector.

Households increased their spending solidly in QIII. The 1.2% increase in the volume of consumer spending was a key upside surprise in the figures. Spending has been growing at its decade average pace for most of the past 2 years.

But the spending figures show some signs of continued strain. Spending continues to surge on utilities, food, rent, transport, health and education items. Households are continuing to battle higher prices for utilities, food and rents.

Whilst the GDP figures show the economy growing strongly, there are other pieces of information in the GDP data which aligns some of the perceptions of economic weakness.

There was a strong 2-speed dynamic at play in the latest economic readings. Demand surged in WA (+8.4%) and Queensland (+3.5%), whilst spending in other regions barely grew (+0.4%). Whilst household spending grew, business investment surged as the mining investment boom began to take off.

The QIII outcome was distinctive for another reason. For some time the economy has failed to grow at a pace that kept up with population growth, perhaps feeding perceptions of economic weakness. But the strengthening of the economy over the past 6 months has seen GDP on a per capita basis finally exceed its pre-GFC level.

Overall, the GDP figures show the economy in relatively good shape, and the mining investment boom beginning to flow through and boost economic growth. But whilst this economic backdrop appears a favourable one at first glance, the divergences in the pace of growth, particularly amongst regions, is likely to continue to be a challenge for the Not for Profit sector. Firms in the sector are likely to feel pressure from fast growing sectors and regions for their resources, such as staff. Whilst slower growing regions of the economy may simultaneously increase demands on the sector. 




Keep up-to-date with all the latest NFP Finance News from the Commonwealth Bank at

Disclaimer: Important Disclosures and analyst certifications regarding subject companies are in the Disclosure and Disclaimer Appendix of this document This report is published, approved and distributed by Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945.  


Yes we’re lawyers, but we do a lot more....


Helping the helpers fund their mission…...

FrontStream Pty Ltd (FrontStream AsiaPacific)

HLB Mann Judd is a specialist Accounting and Advisory firm t...

HLB Mann Judd


More Suppliers

Get more stories like this



New CEO of Impact Investment Group Says Sector is Thriving

Wendy Williams

Tuesday, 14th November 2017 at 8:40 am

Good Money Microfinance Celebrates Five Years of Three-Way Partnership

Lina Caneva

Tuesday, 5th September 2017 at 12:27 pm

Civil Society Challenged: Towards an Enabling Policy Environment

Helmut K Anheier

Monday, 31st July 2017 at 4:17 pm

Does Your NFP Require Financial Guidance?

Staff Reporter

Monday, 27th March 2017 at 11:58 am


Red Cross Moves to Wage-Based Fundraising Model

Lina Caneva

Thursday, 16th November 2017 at 8:30 am

Concerns Raised Over New ACNC Board Appointments

Luke Michael

Monday, 20th November 2017 at 2:28 pm

Disability Advocacy Group Fights to Restore State Funding

Luke Michael

Thursday, 9th November 2017 at 8:37 am

New Same-Sex Marriage Bill Looks to Protect Faith-Based Charities

Luke Michael

Monday, 13th November 2017 at 5:25 pm

Write a Reply or Comment

Your email address will not be published. Required fields are marked *

Good 360
pba inverse logo
Subscribe Twitter Facebook

Get the social sector's most essential news coverage. Delivered free to your inbox every Tuesday and Thursday morning.

You have Successfully Subscribed!