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5302.0 - Balance of Payments and International Investment Position, Australia, Sep 2006  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 05/12/2006   
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SEPTEMBER KEY FIGURES

Jun Qtr 2006
Sep Qtr 2006
Jun Qtr 2006
to Sep Qtr 2006
$m
$m
% change

TREND ESTIMATES

Balance on current account
-12 872
-12 368
4
Balance on goods and services
-2 765
-1 952
29
Net income
-9 997
-10 293
-3

SEASONALLY ADJUSTED

Balance on current account
-13 288
-12 084
9
Balance on goods and services
-3 329
-1 271
62
Net income
-9 856
-10 674
-8

ORIGINAL

Balance on current account
-11 890
-14 035
-18
Balance on capital and financial
account
11 292
14 309
27

Levels at end of period

Net international investment position
548 565
574 384
5
Net equity
49 021
51 932
6
Net debt
499 543
522 452
5

Current Account, Main aggregates - Trend estimates at current prices (a)
Graph: Current Account Main aggregates Trend estimates at current prices

International Investment
Graph: International Investment



SEPTEMBER KEY POINTS


BALANCE OF PAYMENTS

  • The current account deficit, seasonally adjusted, fell $1,204m (9%) to $12,084m. The deficit on the balance of goods and services fell $2,058m (62%) to $1,271m. The income deficit rose $818m (8%) to $10,674m.
  • In seasonally adjusted chain volume terms there was an decrease of $883m (10%) in the deficit on goods and services. This could be expected to contribute 0.4 percentage points to growth in the September quarter 2006 volume measures of GDP.


INTERNATIONAL INVESTMENT POSITION (IIP)
  • Australia's net IIP rose $26b to a net liability position of $574b. Net foreign debt was $522b, an increase of $23b, caused mostly by net debt inflows of $25b. Net equity liabilities increased by $3b to $52b.


NOTES

FORTHCOMING ISSUES

ISSUE (QUARTER) Release Date
December 2006 2 March 2007
March 2007 5 June 2007



REVISIONS

Table 36 summarises revisions, in original current price terms, since the last issue of this publication, for the last three years and six quarters.


There have been significant revisions to the services credits and debits series to incorporate new methodologies and data sources. Details of these revisions are presented in a feature article, Changes to International Trade in Services Statistics, August 2006. The article can be accessed on the ABS web site www.abs.gov.au from the summary page of the August 2006 issue of International Trade in Goods and Services, Australia (cat. no. 5368.0). Revisions to other business services credits and debits were of a similar magnitude, while revisions to travel credits were significantly larger than the revisions to travel debits. As a result, there was a positive impact on the balance of services component of the current account.


The compensation of employees (COE) series, which form part of the Income component of the current account, have been revised to ensure traveller numbers used are consistent with those used in deriving travel services. COE is now derived using the numbers of short-term departures for employment (credits) and short-term arrivals for employment (debits) together with Average Weekly Earnings for each quarter. The revisions to both COE credits and debits for this improved methodology start from September quarter 2002.


Incorporation of the latest survey and administrative data and the new methodologies and data sources has resulted in revisions to the current account back to September quarter 1975. However, the revisions from September quarter 1975 to June quarter 1991 only applied to components of services and did not impact on any balances. In original terms, these revisions have:

  • decreased the 2003-04 current account deficit by $907m
  • decreased the 2004-05 current account deficit by $1,898m
  • decreased the 2005-06 current account deficit by $796m
  • increased the June quarter 2006 current account deficit by $37m.


INQUIRIES

For further information contact Tom Jebbink on Canberra (02) 6252 5540 for balance of payments estimates, and Joe Whelan on Canberra (02) 6252 5541 for international investment estimates.



CHANGES IN THIS ISSUE


FEATURE ARTICLE

A feature article released concurrently with this issue, Foreign Ownership of Equity, updates the analysis of foreign ownership of equity last published in the December quarter 2005 issue of this publication. This article can be accessed on the ABS web site www.abs.gov.au from the summary page of this issue.



SEASONALLY ADJUSTED AND TREND ESTIMATES

The seasonally adjusted and trend estimates of the current account have been revised as a result of the annual seasonal reanalysis which reviews the seasonal factors in more detail than is possible in the quarterly cycle and assesses the appropriateness of any prior corrections which have previously been applied. As a result of the reanalysis, the credits series of goods for processing and the debits series of repairs on goods have been identified as no longer being seasonal in nature.


In addition to the annual reanalysis, the ABS has modified the seasonal adjustment processes applied to quarterly goods and services data to better account for trading day variations. An explanation of this modified approach was published in the September 2006 issue of International Trade in Goods and Services, Australia (cat. no. 5368.0).



SELECTED INTERNATIONAL ACCOUNTS RATIOS - TABLE 35

Ratios of current account and international investment measures to both annual and annualised (i.e. four quarter moving average ending on the reference quarter) GDP are normally presented in Table 35. The updated annual GDP benchmarks released on 1 November 2006 in the Australian System of National Accounts, 2005-06 (cat. no. 5204.0) have been used in the annual ratios presented in this issue. These benchmarks will be incorporated into the quarterly national accounts with the September quarter 2006 issue of Australian National Accounts: National Income and Expenditure (cat. no. 5206.0) to be released on 6 December 2006. The introduction of these benchmarks will change the level of the quarterly GDP used in the annualised ratios. Therefore, annualised ratios using the currently available quarterly GDP would be inconsistent with the annual ratios and have been suppressed in this issue. Table 35 in the Time Series data released in conjunction with this publication will be updated with the release of the quarterly national accounts.



TIME SERIES DATA

A number of financial year time series tables listed on pages 6 to 8 have been extended to include earlier time periods which are already presented in the equivalent quarterly time series tables. These tables previously had start periods of June 1992 and are changed to:


June 1960

  • Tables 56 to 74
  • Table 85
  • Tables 214 to 216

June 1972
  • Table 83


TIME SERIES DATA


TIME SERIES DATA

Data available free on the ABS web site <www.abs.gov.au> from the Details tab of this issue include:
  • longer time series of all tables contained in this publication
  • additional spreadsheets and data cubes as listed below:

51 Balance of payments: summary, original - Financial year


52 International investment position by net foreign equity and net foreign debt - Financial year


53 International investment position by foreign assets by equity and debt - Financial year


54 International investment position by foreign liabilities by equity and debt - Financial year


56 Goods and services: chain volume measures and indexes, original - Financial year


57 Goods credits: original - Financial year


58 Goods debits: original - Financial year


63 Goods credits: implicit price deflators (Index numbers) - Financial year


64 Goods debits: implicit price deflators (Index numbers) - Financial year


65 Services credits: original - Financial year


66 Services debits: original - Financial year


68 Services credits: chain volume measures and implicit price deflators (Index numbers) - Financial year


69 Services debits: chain volume measures and implicit price deflators (Index numbers) - Financial year


70 Income credits: original - Financial year


71 Income debits: original - Financial year


73 Current transfers: original - Financial year


74 Capital account - Financial year


75 Financial Account - Financial year


76 International investment: Australian investment abroad - Financial year


77 International investment: foreign investment in Australia - Financial year


78 International investment: levels of Australian investment abroad - Financial year


79 International investment: levels of foreign investment in Australia - Financial year


80 International investment: foreign debt levels at the end of period - Financial year


81 International investment: gross external debt liabilities - Financial year


83 Balance of payments: exchange rates - Financial year


84 International investment: foreign assets and liabilities: by Industry - Financial year


85 Balance of payments: ratios of current account measures to GDP - Financial year


89 International investment position: historical summary - Financial year


95 Quarterly combined current price seasonal adjustment factors


101 Merchandise exports by SITC division on a Balance of payments basis, chain volume measures


102 Merchandise exports by SITC division on a Balance of payments basis, implicit price deflators


103 Merchandise exports by SITC division and section on a Recorded trade basis, chain volume measures


104 Merchandise exports by SITC division and section on a Recorded trade basis, implicit price deflators


105 Merchandise imports by End-Use categories on a Balance of payments basis, chain volume measures


106 Merchandise imports by End-Use categories on a Balance of payments basis, implicit price deflators


107 Merchandise imports by SITC division and section on a Recorded trade basis, chain volume measures


108 Merchandise imports by SITC division and section on a Recorded trade basis, implicit price deflators


109 Services credits and debits, chain volume measures


110 Services credits and debits, implicit price deflators


111 Balance of payments: current account transactions, seasonally adjusted and trend estimates (percentage change) - Quarter


112 Balance of payments: goods and services, implicit price deflators, original (index) - Quarter


113 Balance of payments: original and seasonally adjusted chain volume measures and indexes (percentage change) - Quarter


114 Balance of payments: goods credits, chain volume measures, original - Quarter


115 Balance of payments: goods debits, chain volume measures, original - Quarter


116 Balance of payments: services credits and debits, current prices, original and seasonally adjusted - Quarter


117 International investment: foreign assets, by direction and type of investment - Quarter


118 International investment: foreign liabilities, by direction and type of investment - Quarter


119 International investment: foreign debt transactions - Quarter


120 International investment: interest income on foreign debt - Quarter


214 Balance of payments: goods credits, chain volume measures, original - Financial year


215 Balance of payments: goods debits, chain volume measures, original - Financial year


216 Balance of payments: services credits and debits, current prices, original - Financial year


217 International investment: foreign assets, by direction and type of investment - Financial year


218 International investment: foreign liabilities, by direction and type of investment - Financial year


219 International investment: foreign debt transactions - Financial year


220 International investment: interest income on foreign debt - Financial year



ANALYSIS AND COMMENTS


BALANCE OF PAYMENTS


CURRENT ACCOUNT

The trend estimate of the balance on current account for the September quarter 2006 was a deficit of $12,368m, a decrease of $504m (4%) on the deficit recorded for the June quarter 2006 where:

  • the net goods deficit fell $703m (23%) to $2,325m
  • the net services surplus rose $110m (42%) to $373m
  • the net income deficit rose $296m (3%) to $10,293m.

In seasonally adjusted terms, the current account deficit fell $1,204m (9%) to $12,084m between the June quarter 2006 and September quarter 2006 where:
  • the net goods deficit fell $1,829m (52%) to $1,704m
  • the net services surplus rose $229m (112%) to $433m
  • the net income deficit rose $818m (8%) to $10,674m.

Goods and Services

The trend estimate of the balance on goods and services at current prices was a deficit of $1,952m, a decrease of $813m (29%) on the June quarter 2006 deficit.


In seasonally adjusted terms, the balance on goods and services was a deficit of $1,271m, a decrease of $2,058m (62%) on the June quarter 2006 deficit where:

  • the goods deficit fell $1,829m (52%) to $1,704m
  • the services surplus rose $229m (112%) to $433m.

The decrease in the goods deficit resulted from higher goods exports, up $365m (1%) and lower goods imports, down $1,464m (3%).


The increase in goods credits was driven by:

  • non-rural goods, up $979m (3%)
  • rural goods, up $276m (4%).

Other goods were down $890m (23%).


The decrease in goods debits was driven by:

  • other goods, down $722m (29%)
  • capital goods, down $611m (6%)
  • intermediate and other merchandise goods, down $153m (1%).

Consumption goods were up $22m.


The increase in the services surplus resulted from higher services credits, up $299m (3%), partly offset by higher services debits, up $70m (1%).


In seasonally adjusted volume terms, the deficit on goods and services was $8,043m, a decrease of $883m (10%) on the $8,926m deficit recorded in the June quarter 2006. The net deficit on goods fell $813m (9%) to $8,142m. Goods debits fell $687m (2%) and goods credits rose $126m. The net services balance was a surplus of $100m, an increase of $71m on the June quarter 2006 surplus of $29m.


The decrease of $883m in the deficit on goods and services in volume terms could be expected to contribute 0.4 percentage points to growth in the September quarter 2006 volume measures of GDP, assuming no significant revision to the GDP chain volume estimate for the June quarter 2006.

Goods and Services(a)
Graph: Goods and Services



Goods Credits

The trend estimate of goods credits rose $1,165m (3%) to $42,547m in the September quarter 2006.


In seasonally adjusted current price terms, goods credits rose $365m (1%) to $42,325m.


Exports of rural goods, in seasonally adjusted terms at current prices, rose $276m (4%) to $6,726m largely on increased volumes. The largest increases were in:

  • cereal grains and cereal preparations, up $193m (15%), with volumes up 14% and prices up 1%
  • meat and meat preparations, up $106m (6%), with volumes up 8% and prices down 2%.

Partly offsetting these increases was other rural, down $25m (1%), largely on decreased volumes.


Exports of non-rural goods, in seasonally adjusted terms at current prices, rose $979m (3%) to $32,543m, on increased volumes and prices. The largest increases were in:

  • other non-rural (incl. sugar and beverages), up $331m (10%), with prices up 12%
  • other mineral fuels, up $304m (9%), with volumes up 6% and prices up 2%
  • metals ores and minerals, up $253m (3%), with volumes up 4% and prices down 1%
  • other manufactures, up $209m (6%), on increased volumes
  • metals (excluding non-monetary gold), up $163m (5%), with volumes down 4% and prices up 9%.

Partly offsetting these increases were falls in:
  • coal, coke and briquettes, down $206m (3%), with volumes up 1% prices down 5%
  • transport equipment, down $137m (11%), with volumes down 12% and prices up 1%.

Exports of other goods, in seasonally adjusted terms at current prices, fell $890m (23%) to $3,056m, driven by a fall in non-monetary gold, down $761m (23%) with volumes down 22% and prices down 2%, and a fall in goods for processing, down $117m (50%), largely on decreased volumes.

General Merchandise Credits(a)
Graph: General Merchandise Credits



Goods Debits

The trend estimate of goods debits rose $462m (1%) to $44,872m in the September quarter 2006.


In seasonally adjusted current price terms, goods debits fell $1,464m (3%) to $44,029m with decreases in both volumes and prices.


Imports of consumption goods, in seasonally adjusted terms at current prices, rose $22m to $13,195m. The largest increases were in:

  • food and beverages, mainly for consumption, up $64m (4%), with volumes up 7% and prices down 3%
  • non-industrial transport equipment, up $51m (1%), largely on increased volumes.

Offsetting these increases were falls in:
  • household electrical items, down $47m (4%), with volumes up 2% and prices down 6%
  • consumption goods, n.e.s., down $29m (1%), with small falls in both volumes and prices
  • toys, books and leisure goods, down $27m (3%), with volumes up 1% and prices down 3%.

Imports of capital goods, in seasonally adjusted terms at current prices, fell $611m (6%) to $9,548m, on both reduced volumes and prices. The largest decreases were in:
  • machinery and industrial equipment, down $215m (6%), with volumes down 5% and prices down 1%
  • capital goods n.e.s., down $208m (13%), with volumes down 11% and prices down 2%
  • civil aircraft, down $116m, on reduced volumes
  • telecommunications equipment, down $104m (7%), with volumes down 3% and prices down 4%.

Offsetting these decreases was a rise in ADP equipment, up $74m (5%), with volumes up 10% and prices down 5%.


Imports of intermediate and other merchandise goods, in seasonally adjusted terms at current prices, fell $153m (1%) to $19,521m, on both reduced volumes and prices.


The largest decrease was in fuels and lubricants, down $742m (12%), with volumes down 10% and prices down 2%.


Partly offsetting this decrease were rises in:

  • processed industrial supplies n.e.s., up $190m (5%), with volumes up 2% and prices up 3%
  • parts for transport equipment, up $123m (6%), with volumes up 5% and prices up 1%
  • other parts for capital goods, up $75m (3%), with volumes up 2% and prices up 1%
  • plastics, up $54m (8%), with volumes up 5% and prices up 3%
  • iron and steel, up $47m (6%), with volumes up 1% and prices up 5%
  • other merchandise goods, up $46m (14%), on increased volumes.

Imports of other goods, in seasonally adjusted terms at current prices, fell $722m (29%) to $1,765m, driven by a fall in non-monetary gold, down $795m (42%), with volumes down 40% and prices down 3%.

General Merchandise Debits(a)
Graph: General Merchandise Debits



Services

The trend estimate of net services was a surplus of $373m, a rise of $110m (42%) on the June quarter 2006 surplus of $263m.


In seasonally adjusted terms, net services recorded a surplus of $433m, a rise of $229m (112%) on the June quarter 2006 surplus of $204m.


Services credits, in seasonally adjusted terms at current prices, rose $299m (3%) to $11,168m, with volumes up 2% and prices up 1%.


All components contributed to the rise in the seasonally adjusted series with:

  • travel services, up $151m (3%), with both volumes and prices up 1%
  • other services, up $106m (4%), with volumes up 3% and prices up 1%
  • transportation services, up $42m (2%) with both volumes and prices up 1%, mainly driven by passenger and other transportation services, up $45m (2%).

Services debits, in seasonally adjusted terms at current prices, rose $70m (1%) to $10,735m largely on increased volumes.


The largest increase was in transportation services, up $136m (4%), mainly driven by passenger and other transportation services, up $122m (7%), on increased volumes.


Partly offsetting this increase was a fall in travel services, down $82m (2%), largely on decreased volumes.


Seasonally adjusted, tourism related services credits rose $147m (2%) to $7,109m and tourism related services debits rose $24m to $5,634m.


Implicit Price Deflator

In seasonally adjusted terms, the implicit price deflator (IPD) for total goods and services credits rose 0.6%. In original terms, it rose by 0.2%. The chain Laspeyres price index for goods and services credits rose 0.5%, indicating that the compositional effects had a downward influence on the movement in the IPD. In original terms, the IPD for goods credits rose 0.1% and the IPD for services credits rose 1.0%.


The total goods and services debits IPD fell 1.4% in seasonally adjusted terms. In original terms, it fell by 1.5%. The chain Laspeyres price index for goods and services debits fell 0.3%.

IMPLICIT PRICE DEFLATOR(a)
Graph: Implicit price deflator



Relationship to IPI and EPI

In original terms, the implicit price deflator for total goods credits rose 0.1% and the chain Laspeyres price index for goods exports rose 0.4%. The export price index (EPI) rose 1.9% during the September quarter 2006.


In original terms, the implicit price deflator for total goods debits fell 1.8% and the chain Laspeyres price index for goods imports fell 0.3%. The import price index (IPI) fell 0.3% during the September quarter 2006.


Terms of trade

Australia's seasonally adjusted terms of trade rose 2.0% to 115.4, with an increase of 0.6% in the IPD for goods and services credits and a 1.4% decrease in the goods and services debits IPD. The trend estimate of the terms of trade increased 1.1% to 114.9.


Income

The trend estimate of the net income deficit rose $296m (3%) to $10,293m.


In seasonally adjusted terms, the net income deficit rose $818m (8%) to $10,674m. Income credits rose $96m (1%) to $7,465m and income debits rose $914m (5%) to $18,139m.


In original terms, the net income deficit rose $2,770m (30%) to $11,943m. Income credits fell $474m (6%) to $7,110m and income debits rose $2,296m (14%) to $19,053m. Income debits rose as a result of portfolio investment equity dividend payments by trading enterprises (which is highly seasonal) and continued strength in the resource sector, in particular the price of nickel, lead and copper has benefited resident enterprises with non resident parents.

Net Income
Graph: Net Income



Current Transfers

In seasonally adjusted terms, the net current transfers deficit was $139m, an increase of $36m (35%) on the $103m deficit recorded in the June quarter 2006. Current transfer credits fell $14m (1%) and current transfer debits rose $22m (2%).



CAPITAL AND FINANCIAL ACCOUNT

Capital Account

In original terms, the capital account surplus was $440m, up $160m (57%) on the June quarter 2006 surplus. Capital transfer credits rose $141m (23%) to $750m and capital transfer debits fell $19m (6%) to $310m.


Financial Account

In original terms, the balance on financial account recorded a net inflow of $13.9b, with a $24.7b inflow of debt and a $10.8b outflow of equity.


Direct investment in Australia recorded an inflow of $21.6b in September quarter 2006, an increase of $15.6b on the June quarter 2006 inflow of $6.1b. Australia's direct investment abroad recorded an outflow of $19.4b, an increase of $13.7b on the previous quarter's outflow of $5.7b. In net terms, direct investment recorded an inflow of $2.2b, an increase of $1.9b on last quarter's inflow of $0.3b.


Portfolio investment recorded a net inflow of $11.7b, a decrease of $5.6b on the net inflow of $17.3b in June quarter 2006. This balance was driven mainly by the continued issuance of debt securities, by residents, on non-resident markets.


Other investment recorded a net outflow of $1.4b, a decrease of $3.2b on the net outflow of $4.7b in the previous quarter.


Reserve assets recorded a net inflow of $2.1b, a turnaround of $4.9b on the previous quarter's net outflow of $2.8b.



INTERNATIONAL INVESTMENT POSITION


INTERNATIONAL INVESTMENT

Australia's net international investment position at 30 September 2006 was a net foreign liability of $574.4b, up $25.8b (5%) on 30 June 2006. The increase consisted of:

  • net transactions of $13.9b
  • price changes of $14.5b
  • exchange rate changes of -$2.7b
  • other adjustments of $0.1b.

During the September quarter 2006 the level of net debt liabilities increased by $22.9b (5%) to $522.5b. Net debt raisings of $24.7b was slightly offset by exchange rate changes of -$2.3b.


During the September quarter 2006 net equity liabilities rose $2.9b (6%) to close at $51.9b. The major contributor to this increase was market price changes of $14.4b which was partially offset by net transactions of -$10.8b.


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