The treasurer, Scott Morrison, says the result is "an encouraging set of numbers" and shows the wisdom of the government's decision to focus on investment.
This left the annual at 2.8 per cent, up smartly from 1.8 per cent previously as the 0.4 per cent growth contraction recorded in the September quarter 2016 dropped out of the equation.
So far this year, Australia has experienced the strongest jobs growth in 40 years, with four out of five jobs being full-time, Mr Morrison said. Average labour earnings increased by just 0.3% in the quarter and 0.6% over the year, and household disposable income rose by just 0.5% and 1.8% over the year, barely above the rate of inflation.
Non-dwelling construction was the biggest contributor to growth through the quarter while there was also a boost from the export sector.
But economists say the growth figures are disappointing because the strength in private investment has masked worryingly weak household consumption.
Households, however, delivered only a small amount of growth in a sign of the struggles some families are having on the back of low wages growth.
"While total compensation of employees was solid at 1.2% quarter-on-quarter and 3% over the year, this is nearly entirely due to strength in employment rather than wages", he said.
Domestic consumption is a major concern given that consumer spending represents 60% of the economy.
Continuing its record-breaking streak of uninterrupted economic growth, Australia has posted modest growth in the first quarter of the new financial year.
Wage growth is crawling at the slowest rate ever, while the unemployment rate is still up around 5.5 percent.
The composition of that latest national accounts was not good, as most components outside of private investment were soft, JP Morgan's chief economist for ANZ Sally Auld, said.
Meanwhile, spending on electricity, gas and other fuels went up 11.5 per cent and cigarettes and tobacco went up 11.1 per cent.
Monthly retail sales released Tuesday showed a return to stronger consumption at the start of the fourth quarter after a dismal winter of spending Down Under, but economists pointed out that the gains were largely a statistical rebound.
Australian consumers are saddled with a mountain of debt which is rising at a much faster pace than incomes. That view looks too optimistic, Mr. Evans said.
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