Trade data hint at solid Dec quarter GDP
- 27 February, 2013 11:56
Economic growth figures are a bit like federal budgets - you get fed bits and pieces before the big day, but even then there are usually some surprises.
The budget's not until May 14, but the economic growth figures are looming.
On Wednesday next week, the Australian Bureau of Statistics (ABS) will publish its national accounts for the December quarter, the final three months, of 2012.
The headline number will be growth in gross domestic product (GDP), in real terms - the volume of goods and services produced in Australia.
That's important, mainly because GDP is produced by people. People with jobs. So more growth means more jobs.
It's that simple.
So, everyone's interested in what the GDP figures will say.
Over the long term, GDP has grown at an average rate of a bit over three per cent a year. The latest annual growth figure, to September, was 3.1 per cent.
The Reserve Bank of Australia, whose forecasting record is no worse than anyone else's, expects growth through 2012 of about 3.5 per cent.
For that to happen, GDP would have to rise by 1.1 per cent or so in the quarter. That's a strong quarterly rise, given a long-run average of about 0.8.
We already have some hints and clues. Retail trade was barely changed in the quarter. That's not all of household spending, and the other parts most likely grew faster, but it's still a worrying sign for anyone hoping for strong growth.
Another sign was delivered by the ABS on Tuesday, in the form of trade figures. They showed the imports of goods and services were up by 0.9 per cent in real terms in the quarter. Imports are important when you're estimating the change in GDP, because they are not made in Australia.
So, you have to adjust your estimate of total spending in Australia by taking off imports and adding exports (which are part of GDP but not domestic spending) to get GDP.
Problem: we don't yet know what exports did in real terms.
Partial solution: we have monthly trade figures and a price index for the goods component of exports. Those figures show the value of exports rose by 1.4 per cent but the price index fell by 2.4 per cent. Bearing in mind the two sets of data never line up perfectly with the national accounts version of exports, that suggests exports rose by around three per cent in real terms.
So, exports added to production more than imports subtracted from it.
And that means that for any increase in spending in Australia - household, business and government consumption and investment spending - GDP probably grew by about 0.5 per cent more. It's what economists call a "positive contribution to growth from net exports".
That's a pointer to a solid GDP figure next week.
But there are a lot more hints and clues to come - construction data on Wednesday, business investment on Thursday, business inventories and profits on Monday, then the final trade figures and government spending data on Tuesday.
So, there's no reason to get excited just yet.