5206.0 - Australian National Accounts: National Income, Expenditure and Product, Jun 2016 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 07/09/2016   
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ANALYSIS AND COMMENTS


GROWTH RATES IN GDP

In seasonally adjusted terms, GDP increased 0.5% in the June quarter, and 3.3% through the year.

GDP, Percentage changes - Volume measures
Graph: GDP, Percentage changes—Volume measures


In trend terms GDP grew 3.1% through the year, the largest contributors to this growth were Mining (0.8 percentage points), Financial and insurance services (0.5 percentage points), Public administration and safety (0.3 percentage points), Construction (0.2 percentage points) and Wholesale trade (0.2 percentage points) industries. Manufacturing (-0.2 percentage points) was the largest detractor in trend terms.

SELECTED INDUSTRIES CONTRIBUTION TO GROWTH, Jun 15 to Jun 16: Trend
Graph: SELECTED INDUSTRIES CONTRIBUTION TO GROWTH, Jun 15 to Jun 16: Trend



TERMS OF TRADE

The Terms of trade represents the relationship between the prices of exports and imports. An increase (decrease) in the Terms of trade reflects export prices increasing (decreasing) at a faster rate than import prices. The Terms of trade increased 2.3% in seasonally adjusted terms in the June quarter following a decrease of 2.1% in the March quarter. From June quarter 2015 to June quarter 2016 the Terms of trade has fallen 5.4% in seasonally adjusted terms.

Terms of Trade, Trend - (2013 - 14 = 100.0)
Graph: Terms of Trade, Trend—(2013—14 = 100.0)



REAL GROSS DOMESTIC INCOME

The real purchasing power of income generated by domestic production is affected by changes in import and export prices. Real gross domestic income adjusts GDP for these changes in the Terms of trade. The graph below provides a comparison of quarterly movements in trend GDP (volume measure) and Real gross domestic income. In trend terms, during the June quarter, Real gross domestic income increased by 0.6%, while the volume measure of GDP increased by 0.7%, the difference reflecting a decrease of 0.4% in the Terms of trade in trend terms.

Percentage changes: Trend
Graph: Percentage changes: Trend



REAL NET NATIONAL DISPOSABLE INCOME

A broader measure of change in national economic well-being is Real net national disposable income. This measure adjusts GDP for the Terms of trade effect, Real net incomes from overseas and Consumption of fixed capital (see Glossary for definitions). The graph below provides a comparison of quarterly movements in trend GDP (volume measure) and Real net national disposable income. During the June quarter, trend Real net national disposable income rose 1.0%. Through the year Real net national disposable income rose 2.1% compared with an increase of 3.1% for GDP.

Percentage Changes: Trend
Graph: Percentange Changes: Trend



NET EXPORTS CONTRIBUTION TO GROWTH

Net exports represents the difference between exports and imports of goods and services. Net exports detract from GDP growth when the change in the volume of imports is greater than the change in the volume of exports. In seasonally adjusted terms, Net exports detracted 0.2 percentage points from GDP growth in the June quarter 2016. In the June quarter 2016, Exports of goods and services contributed 0.3 percentage points and the rise in Imports of goods and services detracted 0.5 percentage points.

NET EXPORTS CONTRIBUTION TO GROWTH, Volume measures
Graph: NET EXPORTS CONTRIBUTION TO GROWTH, Volume measures



HOUSEHOLD SAVING RATIO

The Household saving ratio was 8.0% in seasonally adjusted terms in the June quarter 2016. The trend estimate for the Household saving ratio was 7.9% in the June quarter 2016.

Household saving is not measured directly. It is calculated as a residual item by deducting Household final consumption expenditure from Household net disposable income. As the difference between the two aggregates is relatively small, caution should be exercised in interpreting the Household saving ratio in recent years, because major components of household income and expenditure may be subject to significant revisions. The impact of these revisions on the saving ratio can cause changes in the direction of the trend. For more information on the Household saving ratio, see Spotlight on National Accounts, 2007 - Household Saving Ratio (cat. no. 5202.0).

HOUSEHOLD SAVING RATIO, Current prices
Graph: HOUSEHOLD SAVING RATIO, Current prices



PRICES IN THE NATIONAL ACCOUNTS

The GDP Chain price index rose 0.9% in the June quarter.

The Chain price index for Household final consumption expenditure (HFCE) increased 0.1% in the June quarter 2016, compared with a 0.4% increase in the Consumer Price Index (CPI) over the same period. The HFCE Chain price index is the National Accounts measure most directly comparable to the CPI. However, it should be noted that the conceptual basis for these two price measures are different. The most important differences are:
  • the frequency with which each index is re-weighted;
  • the range of lower level indexes contributing to each index; and
  • the concepts and treatment of household expenditure, particularly in respect of home ownership costs, health, and recreation and culture.

The Chain price index for Private gross fixed capital formation decreased 0.2% in the June quarter. There were falls in the Chain price indexes for Non-dwelling construction (-0.3%), and Machinery and equipment (-0.9%); these were partially offset by an increase in the Chain price index for Dwellings (0.4%).

The Domestic final demand Chain price index, encompassing changes in both consumption and investment prices, increased 0.2% this quarter and has increased 1.1% through the year.

The Export Chain price index increased 0.9% during the June quarter, but has fallen 7.3% through the year. The Import Chain price index decreased 1.2% in the June quarter and 1.4% through the year.

SELECTED EXPENDITURE CHAIN PRICE INDEXES, Percentage changes: Original
Graph: SELECTED EXPENDITURE CHAIN PRICE INDEXES, Percentage changes: Original



NATIONAL ACCOUNTS LABOUR MARKET INDICATORS

The National Accounts dataset contains a number of labour market related indicators. Labour costs are the costs incurred by employers in the employment of labour. These costs include wages and salaries, bonuses, paid leave, superannuation, taxes on employment, training and recruitment costs, and fringe benefits (included in wages and salaries in the national accounts). They are of particular interest as they impact on employers' willingness to employ and individuals' willingness to supply labour.

Labour costs are reflected in household income via Compensation of employees and therefore have a significant impact on household consumption, investment and saving decisions.

In the June quarter 2016, seasonally adjusted Compensation of employees increased 0.5%, and the seasonally adjusted number of employees recorded in the Labour Force survey grew 0.3%. Average compensation per employee increased 0.2%.

In trend terms, Hours worked fell 0.1% over the quarter and increased 1.0% through the year. In the Market sector (see Glossary for definition), Hours worked decreased 0.1% over the quarter and rose 0.7% through the year.

Measure of labour productivity rose in the June quarter. GDP per hour worked (in trend terms) rose 0.8% over the quarter and 2.1% through the year. Market sector Gross value added (GVA) per hour worked (in trend terms) rose 0.9% over the quarter and 2.3% through the year. These measures reflect not only the contribution of labour to changes in production per hour worked, but also the contribution of capital and other factors (such as managerial efficiency, economies of scale, etc.).

Hours worked, Percentage Change: Trend
Graph: Hours worked, Percentage Change: Trend


Unit labour costs (ULC) represent a link between productivity and the cost of labour in producing output. Nominal ULC measures the average cost of labour per unit of output while a Real ULC adjusts the nominal ULC for general inflation. Positive growth in real ULC indicates that labour cost pressures exist. In the June quarter 2016, trend Real ULC decreased 0.1% and the trend Non-farm Real ULC decreased 0.1%. The Non-farm measure is generally preferred as it removes some of the fluctuations associated with Agriculture.

REAL UNIT LABOUR COSTS: Trend - (2013-14 = 100.0)
Graph: REAL UNIT LABOUR COSTS: Trend—(2013–14 = 100.0)



CHANGES IN INVENTORIES

Changes in inventories can have a significant impact on growth in quarterly GDP. A positive change in inventories can be seen as production increasing at a faster rate than consumption but the exact reasons underlying changes in inventories can be far more complex. For example, firms may run up or run down inventories in anticipation of future sales, supply constraints could affect inventories, or firms may under or over estimate sales in a particular period.

The graph below shows GDP growth and the Changes in inventories contribution to GDP growth, both in trend terms. Even in trend terms the Changes in inventories contribution to GDP growth is quite volatile.

INVENTORIES AND GDP, Volume measures: Trend
Graph: INVENTORIES AND GDP, Volume measures: Trend


Changes in inventories can be disaggregated into a number of industries. The graph below shows the four largest inventory holding industries, Mining, Manufacturing, Wholesale trade and Retail trade. In seasonally adjusted terms, Mining, Manufacturing and Retail trade inventories were run down in the June quarter 2016, while Wholesale trade experienced a build-up in inventories.

CHANGE IN INVENTORIES, Selected industries: Trend
Graph: CHANGE IN INVENTORIES, Selected industries: Trend



INCOME ACCOUNTS

The National income account shows how Gross disposable income is used for Final consumption expenditure and the Consumption of fixed capital (depreciation), with the balance being the nation's net saving. In the June quarter 2016, National net saving relative to Net national disposable income was 5.2% in trend terms.

The sectoral income accounts are disaggregations of the National income account, and record for each institutional sector its net income arising from production, property income and transfers from other sectors, and its uses of income. The difference between income and use of income is Net saving. In the June quarter 2016, Net saving for Non-financial corporations was -$3.0b in trend terms. Financial corporations net saving was $7.7b. General government was -$8.8b while Household net saving was $20.7b.

NET SAVING, By sector - relative to Net national disposable income: Trend
Graph: NET SAVING, By sector—relative to Net national disposable income: Trend



RELIABILITY OF CONTEMPORARY TREND ESTIMATES

Trend estimates are used throughout this publication to analyse movements in time series data. 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). 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 current quarter and previous ten quarters, and the values to which they would be revised if the given movements in seasonally adjusted GDP actually occurred in the September quarter 2016. For example, in the absence of any other revisions, for June quarter trend GDP to remain at 0.7%, September quarter seasonally adjusted GDP would need to grow by 0.6%.

PERCENTAGE CHANGE IN GDP CHAIN VOLUME MEASURES

Trend estimate if seasonally adjusted gdp changes by the following amounts in Sep qtr 2016
Seasonally adjusted GDP as published in table 2
Trend GDP as published in table 1
Grows by 1%
No change
Falls by 1%

2013
December
0.8
0.8
0.8
0.8
0.8
2014
March
0.9
0.7
0.7
0.7
0.7
June
0.5
0.6
0.6
0.6
0.6
September
0.4
0.5
0.5
0.5
0.5
December
0.5
0.5
0.5
0.5
0.5
2015
March
0.9
0.6
0.6
0.6
0.6
June
0.2
0.6
0.6
0.6
0.6
September
1.0
0.7
0.7
0.7
0.7
December
0.7
0.8
0.8
0.9
0.9
2016
March
1.0
0.8
0.9
0.8
0.7
June
0.5
0.7
0.8
0.5
0.3