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5206.0 - Australian National Accounts: National Income, Expenditure and Product, Dec 2005  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 01/03/2006   
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DECEMBER KEY FIGURES

% change Sep qtr 05 to Dec qtr 05
% change Dec qtr 04 to Dec qtr 05

GDP (Chain volume measure)
Trend
0.5
2.7
Seasonally adjusted
0.5
2.7
Final consumption expenditure (Chain volume measure)
Trend
0.9
3.1
Seasonally adjusted
1.2
3.2
Gross fixed capital formation (Chain volume measure)
Trend
2.0
9.2
Seasonally adjusted
2.1
7.8
GDP chain price index
Original
1.0
5.1
Terms of trade
Seasonally adjusted
2.1
13.4
Real net national disposable income
Trend
0.7
4.8
Seasonally adjusted
0.7
5.0

GDP growth rates, Chain volume measure, quarterly change
Graph: GDP growth rates, Chain volume measure, quarterly change

Contributions to GDP growth, Expenditure - Seasonally adjusted
Graph: Contributions to GDP growth, Expenditure – Seasonally adjusted



DECEMBER KEY POINTS


VOLUME GDP

  • In trend terms, GDP increased 0.5% in the December quarter. GDP per capita grew by 0.3%, GDP per hour worked in the market sector increased by 1.0% and real net national disposable income grew by 0.7%.
  • In seasonally adjusted terms, GDP increased by 0.5% in the December quarter. Non-farm GDP grew by 0.3%.


EXPENDITURE ON GDP
  • In seasonally adjusted terms, the increase in expenditure on GDP was a result of positive contributions from private business investment (+0.7 percentage points), government consumption (+0.5 percentage points) and household consumption (+0.4 percentage points) offset by negative contributions from net exports (-0.5 percentage points) and changes in inventories (-0.3 percentage points).


INDUSTRY GROSS VALUE ADDED
  • The strongest contributions this quarter were from Agriculture, forestry and fishing, Property and business services and Health and community services, each contributing +0.2 percentage points. Manufacturing had a negative contribution of -0.2 percentage points.


NOTES

FORTHCOMING ISSUES

ISSUE (QUARTER) Release Date
March 2006 7 June 2006
June 2006 6 September 2006



REVISIONS IN THIS ISSUE

Revisions have been made to a number of aggregates. Their net effect on the September quarter 2005 estimate of seasonally adjusted gross domestic product (GDP) (in volume terms) has been to increase quarterly growth by 0.1 percentage points. The causes of the revisions are of two types:
  • the normal quarterly revisions due to the incorporation of more up-to-date source data
  • seasonal reanalysis on a number of series, in particular certain components of gross fixed capital formation and private non-farm inventories.

Preliminary results from the 2004-05 Agricultural Survey have also been incorporated leading to a revision of +0.1 percentage points to the annual growth rate of GDP (in volume terms) in 2004-05.



INQUIRIES

For further information contact Patricia Mahony on Canberra (02) 6252 6711 for industry and income estimates, and Daniel Smith on Canberra (02) 6252 6713 for consumption, investment and trade estimates.



MAIN FEATURES EXPENDITURE CHAIN VOLUME MEASURES

Trend
Seasonally adjusted
Quarterly % change Sep 05 to Dec 05
Annual % change Dec 04 to Dec 05
% points contribution to growth in GDP Sep 05 to Dec 05
Quarterly % change Sep 05 to Dec 05
Annual % change Dec 04 to Dec 05
% points contribution to growth in GDP Sep 05 to Dec 05

Final consumption expenditure
General government
1.2
3.7
0.2
2.7
4.3
0.5
Households
0.7
2.8
0.4
0.7
2.9
0.4
Gross fixed capital formation
Private
Dwellings
-0.9
-0.9
-0.1
-2.7
-2.1
-0.2
Business investment
4.4
17.6
0.7
4.6
14.8
0.7
Ownership transfer costs
-1.9
-1.8
-
1.4
-0.2
-
Public
-0.2
2.5
-
1.0
2.2
-
Changes in inventories
Private non-farm
. .
. .
-0.3
. .
. .
-0.2
Farm and public authority
. .
. .
-
. .
. .
-
Gross national expenditure
0.9
4.5
1.0
1.1
4.4
1.2
Exports of goods and services
-0.2
1.5
-
1.1
1.8
0.2
Imports of goods and services
1.3
6.6
-0.3
3.0
6.3
-0.7
Statistical discrepancy (E)
. .
. .
-0.1
. .
. .
-0.3
Gross domestic product
0.5
2.7
0.5
0.5
2.7
0.5

. . not applicable
- nil or rounded to zero (including null cells)



DECEMBER QUARTER

Summary Comments

Final Consumption Expenditure

  • In trend terms, household consumption increased by 0.7%. Seasonally adjusted growth was also 0.7%. The strongest growth was in hotels, cafes and restaurants up 2.8%, offsetting falls in operation of vehicles and clothing and footwear. Government consumption increased by 1.2% in trend terms (up 2.7% seasonally adjusted), with national government expenditure the main contributor to growth.

Gross fixed capital formation (GFCF)
  • Trend private GFCF strengthened this quarter, up 2.3% (up 2.3% seasonally adjusted). Seasonally adjusted, growth in new engineering construction (up 7.1%) and new machinery and equipment investment (up 6.2%) was offset by a fall in new and used dwellings (down 5.1%).

Changes in inventories
  • Inventories increased by $264 million in trend terms and $196 million in seasonally adjusted terms. Seasonally adjusted, an increase in wholesale and retail trade inventories was offset by a fall in manufacturing and other non-farm inventories. This rise followed a larger rise in September quarter (seasonally adjusted), hence changes in inventories detracted from seasonally adjusted GDP growth.

Exports and imports of goods and services
  • Exports of goods and services fell by 0.2% in trend terms (up 1.1% seasonally adjusted). In seasonally adjusted terms exports of goods rose by 2.4% with the main contributor being non-rural exports (up 4.3%). Exports of services fell by 2.9% seasonally adjusted, with falls in both transportation and travel services.
  • Imports of goods and services rose by 1.3% in trend terms (up 3.0% seasonally adjusted). Imports of goods rose by 4.1% seasonally adjusted mainly due to increased imports of capital goods. Imports of services fell by 1.5% seasonally adjusted, with falls in travel and other services.


MAIN FEATURES PRODUCTION CHAIN VOLUME MEASURES

Trend
Seasonally adjusted
Quarterly % change Sep 05 to Dec 05
Annual % change Dec 04 to Dec 05
% points contribution to growth in GDP Sep 05 to Dec 05
Quarterly % change Sep 05 to Dec 05
Annual % change Dec 04 to Dec 05
% points contribution to growth in GDP Sep 05 to Dec 05

Agriculture, forestry and fishing
0.2
-6.9
-
7.3
-4.9
0.2
Mining
-0.6
1.4
-
-0.3
0.6
-
Manufacturing
-0.1
1.2
-
-1.7
0.4
-0.2
Electricity, gas and water supply
-0.8
-1.2
-
0.9
0.8
-
Construction
1.8
9.2
0.1
0.8
8.6
0.1
Wholesale trade
0.7
3.4
-
1.2
2.6
0.1
Retail trade
-0.2
-0.1
-
-0.1
0.5
-
Accommodation, cafes and restaurants
-1.0
-3.6
-
-1.3
-2.7
-
Transport and storage
-0.5
0.4
-
-1.0
-0.1
-
Communication services
2.1
7.4
0.1
3.3
7.6
0.1
Finance and insurance
1.2
4.1
0.1
1.6
4.4
0.1
Property and business services
0.7
1.5
0.1
1.6
2.4
0.2
Government administration and defence
0.4
2.2
-
0.1
1.9
-
Education
0.3
1.2
-
0.3
1.2
-
Health and community services
1.4
3.9
0.1
2.5
4.0
0.2
Cultural and recreational services
2.9
11.6
-
2.2
11.8
-
Personal and other services
0.3
1.7
-
-0.6
1.0
-
Ownership of dwellings
1.0
3.9
0.1
1.0
3.9
0.1
Taxes less subsidies on products
-
0.2
-
-0.4
-
-
Statistical discrepancy (P)
. .
. .
-
. .
. .
-0.2
Gross domestic product
0.5
2.7
0.5
0.5
2.7
0.5

. . not applicable
- nil or rounded to zero (including null cells)



DECEMBER QUARTER

Summary Comments

Agriculture, forestry and fishing

  • The trend estimate increased 0.2% with the seasonally adjusted estimate growing 7.3%. Seasonally adjusted, agriculture increased 8.0% in the December quarter mainly due to an increase in crop production.

Manufacturing
  • Fell by 0.1% in trend terms and by 1.7% in seasonally adjusted terms. The fall in the seasonally adjusted estimate was mainly due to a 3.9% drop in food production.

Construction
  • The trend estimate grew by 1.8% and the seasonally adjusted estimate was 0.8% higher. Increases for engineering construction offset falls in building activity.

Property and business services
  • There was a 0.7% increase in trend terms and the seasonally adjusted estimate was 1.6% higher. There was increased activity in both the property and business services components.

Wholesale and retail trade
  • Wholesale trade rose by 0.7% in trend terms and by 1.2% in seasonally adjusted terms, while in the Retail trade industry the trend was down by 0.2% and the seasonally adjusted estimate fell by 0.1%. For Wholesale trade the estimates were mainly driven by growth in machinery and motor vehicle wholesaling.


MAIN FEATURES INCOME AT CURRENT PRICES

Trend
Seasonally adjusted
Quarterly % change Sep 05 to Dec 05
Annual % change Dec 04 to Dec 05
% points contribution to growth in GDP Sep 05 to Dec 05
Quarterly % change Sep 05 to Dec 05
Annual % change Dec 04 to Dec 05
% points contribution to growth in GDP Sep 05 to Dec 05

Compensation of employees
1.8
7.5
0.9
1.8
7.5
0.8
Gross operating surplus
Private
2.1
14.6
0.4
1.3
13.9
0.2
Other
1.6
6.6
0.2
1.8
6.7
0.3
Gross mixed income
0.8
0.5
0.1
1.3
1.2
0.1
Taxes less subsidies on production and imports
0.5
1.9
0.1
0.6
2.7
0.1
Statistical discrepancy (I)
. .
. .
0.2
. .
. .
0.5
Gross domestic product
1.8
7.8
1.8
2.0
7.8
2.0

. . not applicable



DECEMBER QUARTER

Summary Comments

Compensation of employees

  • The trend increase of 1.8% in the December quarter reflects a rise of 1.4% in average earnings and a 0.4% rise in the number of wage and salary earners. Seasonally adjusted, compensation of employees grew by 1.8%. Average earnings increased by 1.6%, while the number of wage and salary earners increased by 0.2%. Further discussion of compensation of employees is found on pages 10 and 11.
Wages(a) share of total factor income: Trend
Graph: Wages(a) share of total factor income: Trend



Gross operating surplus (GOS)
  • The trend GOS of financial and non-financial corporations increased by 1.9% in the December quarter. Seasonally adjusted, GOS of financial and non-financial corporations increased by 1.4%, following an increase of 1.4% in the September quarter.
Profit(a) share of total factor income: Trend
Graph: Profit(a) share of total factor income: Trend




MAIN FEATURES STATE FINAL DEMAND CHAIN VOLUME MEASURES

Trend
Seasonally adjusted
Quarterly % change Sep 05 to Dec 05
Annual % change Dec 04 to Dec 05
% points contribution to growth in DFD Sep 05 to Dec 05
Quarterly % change Sep 05 to Dec 05
Annual % change Dec 04 to Dec 05
% points contribution to growth in DFD Sep 05 to Dec 05

New South Wales
0.4
2.3
0.1
0.7
2.0
0.2
Victoria
1.0
4.3
0.3
0.8
3.3
0.2
Queensland
1.9
6.5
0.4
1.2
6.4
0.2
South Australia
0.4
3.1
-
0.4
2.9
-
Western Australia
2.8
9.2
0.3
4.5
10.4
0.5
Tasmania
1.2
5.5
-
1.6
5.2
-
Northern Territory
0.7
10.3
-
3.7
11.5
0.1
Australian Capital Territory
2.1
3.5
0.1
4.0
4.9
0.1
Australia (DFD)(a)
1.2
4.6
1.2
1.4
4.4
1.4

- nil or rounded to zero (including null cells)
(a) Domestic final demand.



DECEMBER QUARTER

Summary Comments

State Final Demand

  • In trend terms growth in the December quarter was strongest in Western Australia (up 2.8%). Lowest growth for the quarter occurred in New South Wales and South Australia (each up 0.4%). In seasonally adjusted terms Western Australia (up 4.5%) showed the strongest growth with the major contributor being private gross fixed capital formation. Seasonally adjusted growth was weakest in South Australia (up 0.4%) due predominantly to a fall in private gross fixed capital formation.

Household final consumption expenditure
  • In trend terms, all states experienced growth, ranging from 1.2% in Western Australia to 0.5% in New South Wales, South Australia and Tasmania. Growth in seasonally adjusted terms was also recorded in most states with Western Australia and the Australian Capital Territory the highest (each up 1.2%).

Government final consumption expenditure
  • Trend growth in the December quarter was strongest in the Australian Capital Territory (up 2.1%) while the growth was lowest in Tasmania and the Northern Territory (each up 0.4%). Seasonally adjusted, the strongest growth occurred in Tasmania (up 6.5%) with weakest growth in Western Australia (up 1.4%).

Private gross fixed capital formation
  • In trend terms, the strongest growth was recorded in Western Australia (up 7.0%). Trend growth was weakest in South Australia (down 0.5%). In seasonally adjusted terms strongest growth was recorded in Western Australia (up 12.4%) with weakest growth in New South Wales and South Australia (each down 2.3%).
  • Strongest growth in investment in machinery and equipment in seasonally adjusted terms occurred in Northern Territory (up 68.7%), with only South Australia recording a fall (down 0.8%). Strongest growth in seasonally adjusted non-dwelling construction occurred in the Australian Capital Territory (up 45.7%) with weakest growth recorded in South Australia (down 8.3%).

Public gross fixed capital formation
  • Growth in trend terms was mixed across the states. Tasmania and the Australian Capital Territory increased 5.7% and 3.6% respectively, while the largest falls were recorded in South Australia and Western Australia (each down 3.7%). In seasonally adjusted terms, strong growth was recorded in Tasmania (up 17.4%).


ANALYSIS AND COMMENTS


GROWTH RATES IN GDP

The graph below provides a comparison of the quarterly growth rates for volume measures of GDP in both seasonally adjusted and trend terms over the last fourteen years. Following the fall in GDP (in seasonally adjusted volume terms) in December quarter 2000 there have been 20 consecutive quarters of growth.

Percentage changes, Chain volume measures
Graph: Percentage changes, Chain volume measures



Growth (in trend volume terms) over the past four quarters has been driven by household final consumption expenditure (up 2.8%), private investment in machinery and equipment (up 17.3%) and new engineering construction (up 27.9%). Offsetting these was a strong rise in imports of goods and services (up 6.6%) and a fall in dwelling investment (down 0.9%).


On the production side, the strongest industries (in trend volume terms) over the past four quarters have been construction (up 9.2%) and finance and insurance (up 4.1%). Detracting from growth were falls in agriculture, forestry and fishing (down 6.9%), accommodation, cafes and restaurants (down 3.6%) and electricity, gas and water (down 1.2%).



REAL GROSS DOMESTIC INCOME

A measure of the real purchasing power of income generated by domestic production is the chain volume measure of GDP adjusted for the terms of trade effect, which is referred to as real gross domestic income (see Glossary for definition). The graph below provides a comparison of quarterly movements in trend GDP (volume measure) and real gross domestic income. During the December quarter, trend real gross domestic income increased by 1.0%, compared to the increase in the trend volume measure of GDP of 0.5%, reflecting a 2.0% improvement in the terms of trade. Trend and seasonally adjusted estimates of real gross domestic income are shown in tables 1 and 2.

Percentage changes, Trend
Graph: Percentage changes, Trend




TERMS OF TRADE

The graph below shows the trend terms of trade (see Glossary for definition) over the past fourteen years. The very strong growth in the terms of trade since March quarter 2003 (up 30.8%) reflects a 19.0% growth in export prices and a 9.0% fall in import prices over the period. In December quarter 2005 the terms of trade rose 2.0% in trend terms, driven by a 2.9% rise in export prices.

Trend, (2003-04 = 100)
Graph: Trend, (2003–04 = 100)




REAL NET NATIONAL DISPOSABLE INCOME

A broader measure of change in national economic well-being is real net national disposable income. This measure adjusts the volume measure of GDP for the terms of trade effect, real net incomes from overseas and consumption of fixed capital (see Glossary for definition). The graph below provides a comparison of quarterly movements in trend GDP (volume measure) and real net national disposable income. During the December quarter, trend real net national disposable income increased by 0.7%, while the increase in the trend volume measure of GDP was 0.5%.

Percentage changes, Trend
Graph: Percentage changes, Trend




HOUSEHOLD SAVING RATIO

In both trend and seasonally adjusted terms the household saving ratio (see Glossary for definition) was negative in December quarter 2005, implying that household consumption was greater than household disposable income. In trend terms the ratio was -2.1% in December quarter 2005 and in seasonally adjusted terms it was -2.0%. The following graph presents the household saving ratio derived from trend and seasonally adjusted data.

Household saving ratio, Current prices
Graph: Household saving ratio, Current prices



Although seasonally adjusted household saving has been negative over the past three years, net national saving has been positive over the same period. The national net saving ratio in the December quarter 2005 was 5.9% in seasonally adjusted terms.


Caution should be exercised in interpreting the household saving ratio in recent years, because major components of household income and expenditure may still be subject to significant revisions. The impact of these revisions on the saving ratio can cause changes in the apparent direction of the trend.



COMPENSATION OF EMPLOYEES

In December quarter 2005, seasonally adjusted compensation of employees grew by 1.8%, while the seasonally adjusted number of employees recorded in the Labour Force survey grew by 0.2%. Thus, average compensation per employee increased by 1.6%. This follows growth of 0.7% and 1.4% in the June quarter 2005 and September quarter 2005 respectively. Through the year growth in average compensation per employee was 4.8% compared to 4.2% growth over the same period in the total hourly rates of pay, excluding bonuses as published in Labour Price Index, Australia (cat. no. 6345.0). (It should be noted that the conceptual bases for the two wage measures are different.)



PRIVATE NON-FARM INVENTORIES TO TOTAL SALES RATIO

In trend current price terms, the book value of private non-farm inventories increased by $1,728 million (1.6%) in December quarter 2005, while total sales rose by $3,930 million (2.7%). Consequently, the trend inventories to total sales ratio (see Glossary for definition) decreased from 0.740 in the September quarter 2005 to 0.732 in December quarter 2005. The following graph presents the ratio of private non-farm inventories to total sales over the last fourteen years.

Trend, Current prices
Graph: Trend, Current prices




IMPORTS TO DOMESTIC SALES

The imports to domestic sales ratio (see Glossary for definition), trended and at current prices, increased from 0.346 in the September quarter 2005 to 0.349 in the December quarter. This reflects a rise of 2.8% in imports of goods accompanied by a 2.0% rise in domestic sales. The following graph presents the ratio of imports to domestic sales over the last fourteen years.

Trend, Current prices
Graph: Trend, Current prices




RELIABILITY OF CONTEMPORARY TREND ESTIMATES

Trend estimates are used throughout this publication as an alternative approach to the analysis of movements in time series data. Further details regarding the procedures used to estimate the trend series are described in the Explanatory Notes (paragraphs 13 - 17) and in Information Paper: A Guide to Interpreting Time Series - Monitoring Trends, 2003 (cat. no. 1349.0) released in August 2003.


Potential revisions to trend estimates can be indicated by showing the effects of particular changes in seasonally adjusted estimates that might occur in the next quarter. The table below shows the trend estimates for the last ten quarters and the values to which they would be revised if the given movements in seasonally adjusted GDP actually occurred in March quarter 2006. Seasonally adjusted growth of 0.7% is required in March quarter 2006 to maintain, in March quarter 2006, the trend growth of 0.5% currently estimated for the December quarter 2005.

Percentage change in GDP Chain volume measure

Trend estimate if seasonally adjusted GDP changes by the following amounts in March qtr 2006
Seasonally adjusted GDP as published in table 2
Trend GDP as published in table 1
Grows by 1.0%
No change
Falls by 1.0%

2003
September
1.7
1.2
1.2
1.2
1.2
December
1.6
1.4
1.4
1.4
1.4
2004
March
0.8
1.1
1.1
1.1
1.1
June
0.5
0.5
0.5
0.5
0.5
September
0.4
0.3
0.3
0.3
0.3
December
0.3
0.5
0.5
0.5
0.5
2005
March
0.7
0.7
0.7
0.7
0.7
June
1.3
0.8
0.8
0.8
0.9
September
0.3
0.6
0.7
0.6
0.5
December
0.5
0.5
0.6
0.3
0.1


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