ABS figures show Australian Gross Domestic Product (GDP) rose 3.4% in the December quarter of 2021.
The ABS attributes the increase to the end of lockdowns for NSW and Victoria.
Growth was strongest in the states most affected by Delta wave restrictions. As restrictions eased, the states that saw the strongest growth in demand in the December quarter were New South Wales (6.7%), Victoria (3.7%) and the Australian Capital Territory (1.9%).
Sean Crick, acting head of National Accounts at the ABS, said after experiencing a fall off in the September quarter due to a number of state lockdowns, the Australian economy recovered in the December quarter, surpassing the pre-Delta June quarter 2021 level.
"Domestic demand drove the growth this quarter, with high levels of household spending, particularly in the states that emerged from COVID-19 lockdowns," he said.
"Household spending in NSW, Victoria and the ACT rose 9.6%, compared to the rest of Australia which rose 1.6%."
Westpac economist Andrew Hanlan said the results show a rapid rebound.
"The result represents a relatively rapid rebound from delta disruptions, evidence that households and businesses are continuing to adapt to the challenges of the pandemic," he said.
"Over the two years of the pandemic, a sizeable household savings buffer has been accumulated.
"This can be drawn upon to help fund future spending – thereby supporting what is likely to be a strong economic recovery in 2022 (associated with high vaccination rates)."
Spending rises while saving decreases
According to ABS data, the household saving to income ratio fell from 19.8% to 13.6%.
The fall in household saving was driven by increased household spending, coupled with a decline in household income.
Household spending increased 6.3% with the largest increases in non-essential spending (14.2% - the largest increase on record). In contrast, essential spending such as housing and food rose a moderate 1.9%.
Household gross disposable income fell 0.5% with the reduction of government support payments to households and unincorporated businesses affected by COVID-19.
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