{"id":11368,"date":"2010-09-01T17:48:57","date_gmt":"2010-09-01T07:48:57","guid":{"rendered":"https:\/\/billmitchell.org\/blog\/?p=11368"},"modified":"2010-09-01T17:48:57","modified_gmt":"2010-09-01T07:48:57","slug":"australia-continues-to-grow-but-the-signs-are-not-all-good","status":"publish","type":"post","link":"https:\/\/billmitchell.org\/blog\/?p=11368","title":{"rendered":"Australia continues to grow but the signs are not all good"},"content":{"rendered":"

\t\t\t\tWell its officially Spring in Australia and today in Newcastle it is a very warm 23 degrees (warm for this time of year) and it looks like being a long hot (beautiful) summer. The statistics world is looking very bright today as well with the release by the Australian Bureau Statistics of the National Accounts data<\/a> for the June quarter. The media are today beating up a story about the Goldilocks economy which on first glimpse is a reasonable conclusion. But given that growth has been driven by rising personal consumption and falling saving when household debt remains at dangerous levels, and export growth which is mostly due to terms of trade effects which will not last for much longer and government fiscal stimulus spending which is now being withdrawn something has to happen to private investment soon for the growth to endure. Further, if you take the government contribution out over the last year then things look very sick indeed. The fiscal intervention definitely kept the Australian economy afloat over the last year although that impact is now waning significantly.
\n
\nThe following graph shows the quarterly percentage growth in real GDP from June 2006 to June 2010 (blue columns) and the ABS trend series (red line) superimposed to bring out the fact that the Australian economy is now experiencing fairly solid growth and the latest quarter will push the trend growth rate up a little.<\/p>\n

\"\"<\/a><\/p>\n

<\/div>\n

The Sydney Morning Herald reported today (September 1, 2010) that Australia’s economic growth accelerates<\/a>.<\/p>\n

The Report said:<\/p>\n

\nAustralia remains home to one of the world’s best performing economies, with the latest data showing growth is now back to pre-financial crisis levels. The economy grew a seasonally adjusted 1.2 per cent in the June quarter, up from a revised 0.7 per cent pace reported for the January-March period … Economists had expected gross domestic product to register a 0.9 per cent expansion rate for the June quarter.\n<\/p><\/blockquote>\n

The quarterly growth rate of 1.2 per cent is the best performance since the June quarter of 2007, just before the crisis started to impact.<\/p>\n

But while one bank economists said that the result “highlights just how different the Australian economy is from the rest of the world” he also said “The most encouraging sign is some indications that the private sector is coming back in, a lot of the past 12 months has been a public sector a story and we really need the private sector to sign off on the recovery story.”<\/p>\n

There is still a very weak private sector contribution outside of household consumption which was the biggest contributor to the growth in the June quarter.<\/p>\n

So what is driving this growth? The following graph shows the percentage contributions to real GDP growth in the June 2010 quarter by aggregate spending type.<\/p>\n

\"\"<\/a><\/p>\n

<\/div>\n

While GDP growth was 1.2 per cent in the June quarter, private consumption added 0.9 percentage points to that (whereas in the March quarter it added only 0.3 percentage points to overall growth). Retail trade data which was published yesterday suggest there is a strengthening in that area of the economy.<\/p>\n

Private investment contributed 0.2 percentage points which was a modest recovery from the negative contribution in the March quarter. There is very little productive capacity being added to the Australian economy at present.<\/p>\n

The external sector also was a strong contributor – net exports added adding 0.4 percentage points which was a reversal to the negative contribution in the March quarter.<\/p>\n

Yesterday (August 31, 2010) the Australian Bureau of Statistics released the June quarter Balance of Payments<\/a> data which showed a strong reversal in the overall balance and a positive net exports of goods and services.<\/p>\n

The main results in seasonally adjusted terms were:<\/p>\n