The debilitating effects of drought on farmers and their surrounding regional communities will become more fully apparent in the next couple of quarterly figures, but overall the economy has turned in a very creditable performance. What has driven this growth in domestic demand?
It has been a combination of ongoing expansion in consumer demand, high levels of investment in housing and the early phase of what will probably be a lengthy upward trend in business capital spending. For the household sector, as we spell out in our Statement on Monetary Policy, moderate rises have occurred in income, as employment has grown and wages have increased.