Australian economy grows 0.6 per cent in December quarter 2015
Australia’s GDP, in seasonally adjusted chain volume terms, grew 0.6 per cent in the December quarter 2015, according to figures released today by the Australian Bureau of Statistics (ABS).
The On Wednesday March 2 the Australian Bureau of Statistics released the National Income, Expenditure and Product figures for the December quarter 2015. growth in expenditure was driven by a rise of 0.8 per cent in Household final consumption expenditure and a rise of 6.0 per cent in Public gross fixed capital formation. These were partially offset by a fall in private business investment (-3.3 per cent), driven by a fall in new engineering construction (-12.3 per cent).
The growth in Household final consumption was reflected in the service industries of Information, media and telecommunications (2.7 per cent), and Retail trade (1.0 per cent). Other industries that had significant growth were Rental, hiring and real estate (2.8 per cent) and Wholesale trade (1.6 per cent).
The December quarter saw the Terms of trade decrease 3.2 per cent in seasonally adjusted terms.
A beautiful set of numbers
A Michael Pascoe article in the Sydney Morning Herald, December 10, 2009, revived memory of Paul Keating famous description of the December 1989 quarter national account figures, showing buoyant employment figures, as “A beautiful set of numbers”.
What most of us would have forgotten was that this memorable ?self congratulatory phrase made in 1990 preceded two years of recession.
Federal Treasurer Scott Morrison’s demeanour in presenting the ABS result was not cocky, but he undoubtedly was delighted to present better than expected economic data to the media showing Australia was growing faster than the G7 nations and above the OECD average.
- More than offsetting the decline in investment in resources was increased household expenditure (up 0.8%), services, and public investment.
- Investment in new and used dwellings increased 3.6% in the December quarter.
- Investment in apartments (favoured by investors) increased 12.1% over the past year responding to record low interest rates.
- Dwelling prices moderated in 2015 as the banking regulator APRA pressured lending institutions to increase investment mortgage interest rates and to lower loan to value lending ratios.
- Exports grew 0.6% in the December quarter.
- Business investment fell 2.7% to be 12%.
- Terms of trade was negative due to falls in commodity prices.
- Wage income growth moderated, and >300,000 jobs were added.
- As a result of slowed profit growth, lower export prices and wages, and therefore nominal GDP, government revenue was lower in the December Quarter and there has needed to be a significant write down of revenues from the last budget in the MYEFO report (Mid Year Economic and Fiscal Outlook).
- The government is conscious of the need for expenditure restraint in the coming May budget, and the need for more business investment in the non-mining sectors.
- China is also transitioning from a production economy to a more consumer based economy.
- Wisely the government is looking for a period of fiscal consolidation, rather than a tax and spend policy..
Despite the optimistic view from the GDP figures that a recession in 2016 has been averted, there are causes for concern in the current Australian property market which could be addressed in a subsequent post.