Australian National Accounts – I wouldn’t say the economy is great
The on-going rhetoric being used to push the federal budget into surplus is that the Australian economy is growing so fast as a result of the mining boom (record commodity prices) that we are in danger of an inflationary break-out. This is at a time when 12.5 per cent of our labour resources are idle (unemployed or underemployed). Today’s Australian Bureau of Statistics release of the National Accounts data for the December quarter shows that the mining sector is making a zero contribution to real GDP growth. Overall, the data shows that the Australian economy grew by 0.7 per cent in the December quarter giving an annual growth of 2.7 per cent. This is not enough to eat into the pool of idle labour given that productivity growth is around 1 per cent per annum and labour force growth is around 1.7 per cent. The zero contribution of private investment is the most disappointing feature of today’s data. But we have to be cautious – this is a rear-view mirror of what the economy was doing 3 months ago. But even so, there is nothing in this data that suggests Australia is facing an inflation problem of too much growth. The growth rate is still not strong enough and with the withdrawal of the fiscal stimulus and China introducing contractionary policies there is still some uncertainty ahead.