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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)

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.

• 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.

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

• Table 83

• longer time series of all tables contained in this publication
• additional spreadsheets and data cubes as listed below:

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.

• 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.

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 increase in goods credits was driven by:

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

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%).

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)

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%.

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%.

• 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%.

General Merchandise Credits(a)

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.

• 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%.

• 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%.

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.

General Merchandise Debits(a)

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%).

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)

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

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 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.