Friday, 7 March 2014

Joe Hockey and putting the gloomiest figures forward

I guess that when you still want to be able to blame your predecessor for anything that’s remotely bad you need to be careful about sounding too enthusiastic about any inherited figures showing that things are in fact going ahead quite nicely. So it was that Treasurer Joe Hockey treated this week’s GDP figures from the Australian Bureau of Statistics for the December quarter in a very downbeat fashion rather than put them in the context of the latest international summary by the OECD.
2014-03-07_decgrowthrate
Far from pointing out how well Australia is doing compared to other developed countries he stressed a negative. “Today’s numbers,” said the Treasurer, ”highlight the growth challenge that the economy will face in the next couple of years as construction on a number of large mining projects comes to an end.”
The pattern of growth in today’s numbers shows an increasing reliance on the export sector. Exports of goods and services rose 2.4 per cent in the December quarter and Australia’s trade balance shifted into surplus.  Net exports accounted for around two‑thirds of growth in the December quarter, while gross national expenditure (a measure of domestic spending) accounted for only a third.  Much of this export growth is coming from the resources sector, which needs fewer workers per dollar of production than the rest of the economy.
And then this:
Nominal GDP, the dollar value of goods and services produced in the economy, increased by 1.6 per cent in the December quarter.  This was in part because the price of iron ore held up relatively well in the December quarter, with the terms of trade rising by 0.6 per cent after falling by 3.1 per cent in the previous quarter.  World prices for both iron ore and coal have fallen since December, suggesting that the terms of trade may weigh on nominal GDP growth in the March quarter.
Not that there was any sign of that warning about iron ore and coal prices weighing on that nominal GDP growth coming true in the January trade figures released the day after the Hockey statement.
In seasonally adjusted terms, exports of non-rural goods rose $536m (3%) to $19,886m.
The main components contributing to the rise in seasonally adjusted estimates were:
. metal ores and minerals, up $290m (3%)
. other mineral fuels, up $162m (6%)
. coal, coke and briquettes, up $55m (2%)
. machinery, up $42m (6%).
The detailed export figures from that ABS release show this picture of how the mining boom is taking over from the mining investment boom:
2014-03-06_metalandcoalexports
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