However, this still left the annual rate at minus 3.8 per cent after a large seven per cent contraction in the June quarter, the national accounts for the September quarter released on Wednesday show.
Economists’ forecasts had centred on a 2.5 per cent rise for the quarter.
“Australia’s recession may be over, but Australia’s economic recovery is not,” Treasurer Josh Frydenberg told reporters in Canberra.
“There is a lot of ground to make up and many Australian households and many Australian businesses are doing it tough – very tough.”
Household spending contributed four percentage points, as coronavirus restrictions lifted over the period across most states and territories, the Australian Bureau of Statistics figures showed.
The household saving to income ratio declined from its record high last quarter, but remains elevated at 18.9 per cent.
The fall was driven by the partial recovery in household consumption, which outpaced income growth.
Household disposable income grew 3.4 per cent as economic activity increased.
Private investment fell 0.2 per cent over the quarter, with increased housing investment activity offset by a three point dip in business investment.
Reserve Bank of Australia governor Philip Lowe welcomed the rebound in economic growth.
Dr Lowe told federal MPs he had been hoping for growth of at least two per cent in the September quarter and that he expects solid growth in the December quarter as well.
“We have now turned the corner and a recovery is under way,” Dr Lowe told a House of Representatives economics committee on Wednesday.
Told during the hearing the economy had recovered 3.3 per cent in quarter, Dr Lowe said: “The positive GDP number … is good.”
The Reserve Bank had not expected the growth rate to return to its pre-COVID levels until the end of 2021.
“If we keep getting numbers like that it will be a bit quicker,” Dr Lowe said.
Dr Lowe had told the hearing the economy was performing much better than the central bank expected when it last addressed the committee three months ago, and when he thought it would be lucky to see positive growth in the September quarter.
“Things have turned out to be much better,” he said.
“Employment growth has been stronger, retail has been stronger and the housing market has been more resilient.”
The Reserve Bank board left its suite of monetary policy measures unchanged at Tuesday’s monthly board meeting, having cut the cash rate, and other key rates, to a record low 0.1 per cent in October.
The central bank confirmed it had bought $19 billion of government bonds under its new $100 billion quantitative easing program, which aims at keeping market interest rates low and, in turn, borrowing costs down.
The board reiterated that the cash rate is unlikely to rise for three years given the outlook for unemployment and inflation.
-with AAP