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ANALYSIS AND COMMENTS
In seasonally adjusted current price terms, the September quarter 2016 current account deficit was $11,358m, a fall of $4,585m (29%) on the June quarter 2016 deficit. In trend current price terms, the September quarter 2016 current account deficit was $11,959m, a fall of $2,660m (18%) on the June quarter 2016 deficit. The contributors to the current account balances, in seasonally adjusted and trend terms at current prices, are shown in the following table.
TERMS OF TRADE(footnote 1) Australia's seasonally adjusted terms of trade on net goods and services for the September quarter 2016 rose 4.5% to 93.9, with an increase of 3.4% in the implicit price deflator (IPD) for goods and services credits and a decrease of 1.1% in the IPD for goods and services debits. In trend terms, the terms of trade for net goods and services rose 2.6% to 92.6. BALANCE ON GOODS AND SERVICES In seasonally adjusted chain volume terms, the balance on goods and services was a surplus of $561m, a fall of $871m (61%) on the June quarter 2016 surplus of $1,432m. The net surplus on goods fell $686m (31%) on the June quarter 2016 surplus of $2,182m. Goods credits fell $176m and goods debits rose $510m (1%). The net deficit on services rose $185m (25%) on the June quarter 2016 deficit of $750m. The fall in the balance on goods and services surplus, in seasonally adjusted chain volume terms, is expected to detract 0.2 percentage points from growth in the September quarter 2016 volume measure of GDP, assuming no significant revision to the GDP chain volume estimate for the June quarter 2016. Goods The trend estimate of net goods at current prices for the September quarter 2016 was a deficit of $3,736m, a fall of $1,701m (31%) on the June quarter 2016 deficit of $5,437m. In seasonally adjusted terms at current prices, net goods was a deficit of $3,197m, a fall of $2,515m (44%) on the June quarter 2016 deficit of $5,712m.
GOODS CREDITS The trend estimate of goods credits at current prices rose $1,441m (2%) to $61,978m in the September quarter 2016. In seasonally adjusted terms at current prices, goods credits rose $2,367m (4%) to $62,973m, with prices up 4%. Rural Goods Exports of rural goods, in seasonally adjusted terms at current prices, rose $340m (3%) to $10,523m, with volumes up 1% and prices up 2%. The main components contributing to the rise were:
Partly offsetting these rises was meat and meat preparations, down $274m (9%), with volumes down 19% and prices up 11%. Non-rural Goods Exports of non–rural goods, in seasonally adjusted terms at current prices, rose $1,410m (3%) to $46,546m, with volumes down 1% and prices up 4%. The main components contributing to the rise were:
Partly offsetting these rises were:
Net Exports of Goods Under Merchanting Net exports of goods under merchanting, in seasonally adjusted terms at current prices, rose $17m (14%), with volumes up 11% and prices up 3%. Non-monetary Gold Non-monetary gold, in original and seasonally adjusted terms at current prices, rose $600m (12%), with volumes up 7% and prices up 4%. GOODS DEBITS The trend estimate of goods debits at current prices fell $260m to $65,714m in the September quarter 2016. In seasonally adjusted terms at current prices, goods debits fell $148m to $66,170m, with volumes up 1% and prices down 1%. Consumption Goods Imports of consumption goods, in seasonally adjusted terms at current prices, fell $874m (4%) to $23,404m, with volumes down 3%. The main components contributing to the fall were:
Capital Goods Imports of capital goods, in seasonally adjusted terms at current prices, rose $220m (1%) to $15,373m, with volumes up 3% and prices down 2%. The main components contributing to the rise were:
Partly offsetting these rises was machinery and industrial equipment, down $192m (4%), with volumes down 3% and prices down 1%. Intermediate and Other Merchandise Goods Imports of intermediate and other merchandise goods, in seasonally adjusted terms at current prices, rose $94m to $25,509m, with volumes up 2% and prices down 1%. The main components contributing to the rise were:
Partly offsetting these rises were:
Non-monetary Gold Imports of non-monetary gold, in original and seasonally adjusted terms at current prices, rose $412m (28%), with volumes up 23% and prices up 4%. SERVICES The trend estimate of net services at current prices was a deficit of $1,364m, a fall of $346m (20%) on the June quarter 2016 deficit of $1,710m. In seasonally adjusted terms at current prices, net services was a deficit of $1,485m, a fall of $183m (11%) on the June quarter 2016 deficit of $1,668m.
Services Credits Services credits, in seasonally adjusted terms at current prices, rose $492m (3%) to $18,167m, with volumes up 2%. The main components contributing to the rise were:
Partly offsetting these rises was transport, down $46m (3%), with volumes down 3%. In seasonally adjusted terms, tourism related services credits rose $379m (3%) to $11,745m. Services Debits Services debits, in seasonally adjusted terms at current prices, rose $310m (2%) to $19,653m, with volumes up 3% and prices down 2%. The main components contributing to the rise were:
Partly offsetting these rises was transport, down $76m (2%), with volumes down 3% and prices up 1%. In seasonally adjusted terms, tourism related services debits rose $223m (2%) to $10,206m. PRIMARY INCOME The trend estimate of the net primary income deficit at current prices fell $630m (9%) to $6,469m in the September quarter 2016. In seasonally adjusted terms at current prices, the net primary income deficit fell $1,946m (24%) to $6,265m in the September quarter 2016. Primary Income Credits Primary income credits, in seasonally adjusted terms at current prices, rose $315m (2%) to $15,369m. The main component contributing to the rise was direct investment assets, income on equity and investment fund shares, up $356m (5%). Primary Income Debits Primary income debits, in seasonally adjusted terms at current prices, fell $1,630m (7%) to $21,634m. The main component contributing to the fall was portfolio investment liabilities, investment income on equity and investment fund shares, down $703m (14%). SECONDARY INCOME The trend estimate of the net secondary income deficit at current prices rose $17m (5%) to $390m in the September quarter 2016. In seasonally adjusted terms at current prices, the net secondary income deficit rose $59m (17%) to $411m in the September quarter 2016. CAPITAL ACCOUNT In original terms, the capital account deficit was $126m, a decrease of $48m (28%) on the June quarter 2016 deficit of $174m. Capital account credits decreased $24m (83%) and capital account debits decreased $72m (35%) in the September quarter 2016. FINANCIAL ACCOUNT The balance on the financial account, in original terms, recorded a net inflow of $15.8b, which was driven by a net inflow of equity of $10.4b and a net inflow of debt of $5.5b. The financial account surplus increased $0.4b (2%) from $15.5b to $15.8b in the September quarter 2016. Direct Investment Direct investment recorded a net inflow of $9.7b in the September quarter 2016, a decrease of $5.9b on the net inflow of $15.7b in the June quarter 2016, where:
Portfolio Investment Portfolio investment recorded a net outflow of $9.4b in the September quarter 2016, a decrease of $3.4b on the net outflow of $12.8b in the June quarter 2016, where:
Financial Derivatives Financial derivatives recorded a net outflow of $3.7b in the September quarter 2016, a decrease of $1.2b on the net outflow of $4.9b in the June quarter 2016. Other Investment Other investment recorded a net inflow of $18.4b in the September quarter 2016, a decrease of $0.6b on the net inflow of $19.1b in the June quarter 2016. This was driven by net inflows in currency and deposits of $19.0b and in loans of $0.6b. Reserve Assets Reserve assets recorded an inflow of $0.8b in the September quarter 2016, a turnaround of $2.3b on the outflow of $1.5b in the June quarter 2016. INTERNATIONAL INVESTMENT POSITION (IIP) Australia's net IIP liability position was $1,043.3b at 30 September 2016, an increase of $5.4b (1%) on the revised 30 June 2016 position of $1,037.9b. Australia's net foreign debt liability increased $0.8b to $1,048.5b. Australia's net foreign equity asset decreased $4.6b (47%) to $5.2b at 30 September 2016. The changes contributing to this result are shown in the following table.
SUPPLEMENTARY INFORMATION CONDITIONS The conditions in the global economy showed modest growth in Australia’s major trading partner countries in the September quarter 2016. According to the Organisation for Economic Cooperation and Development (OECD)(footnote 2), preliminary growth rates compared to last quarter in seasonally adjusted terms showed quarterly growth for China (1.8%), Indonesia (1.2%), South Korea (0.7%), USA (0.7%), UK (0.5%), Euro 28 (0.4%) and Germany (0.2%).
The Australian share market, as measured by the MSCI global index(footnote 3), increased 3.8% in September quarter 2016, following an increase of 2.8% in June quarter 2016. Increases were recorded in Hong Kong (11.0%), Germany (8.7%), New Zealand (7.7%), Japan (6.4%), UK (6.0%), Europe ex. UK (5.8%), Canada (5.5%), France (5.0%), the USA (3.5%) and Switzerland (1.9%). A decrease was recorded in Singapore (0.6%). A market price change of -$41.7b was recorded for foreign equity assets and $14.8b in foreign equity liabilities in the September quarter 2016. According to Bloomberg(footnote 4), the composite corporate benchmark yield decreased in the USA from 2.92% to 2.87%, the UK from 2.55% to 1.99%, Germany from 0.93% to 0.70% and Australia from 3.16% to 2.93%. In Japan, the rate increased from 0.13% to 0.18%. The long-term 10 year government bond yields increased in the USA from 1.50% to 1.60% and Japan from -0.23% to -0.08%. The decreases were in the UK from 0.87% to 0.75% and Germany from -0.13% to -0.19%. In Australia, the rate decreased from 2.12% to 1.99%. A market price change of -$0.6b was recorded for portfolio debt securities assets and $1.3b in portfolio debt securities liabilities in the September quarter 2016. The Australian dollar appreciated against the majority of the major currencies in the September quarter 2016. The Australian dollar appreciated 6.07% against the UK pound sterling, 4.17% against the Canadian dollar, 3.14% against the Chinese renminbi, 2.75% against the US dollar, 1.54% against the European euro, 1.30% against the Indonesian rupiah, 1.28% against the Indian rupee and 1.18% against the Japanese yen. It depreciated 4.15% against the South African rand, 2.04% against the South Korean won and 0.05% against the New Zealand dollar. The Trade-weighted Index (TWI)(footnote 4,footnote 5) recorded a rise of 2.24%. This was reflected in exchange rate changes for foreign assets of $36.7b and foreign liabilities of -$20.4b in the September quarter 2016. RELATIONSHIP BETWEEN IPD, EPI AND IPI(footnote 6) In original terms, the IPD for total goods credits rose 3.2% and the chain Laspeyres price index for goods exports rose 3.6%. The Export Price Index (EPI)(footnote 7) rose 3.5% during the September quarter 2016. In original terms, the IPD for total goods debits fell 0.7% and the chain Laspeyres price index for goods imports fell 0.8%. The Import Price Index (IPI)(footnote 7) fell 1.0% during the September quarter 2016. Differences between the IPD and International Trade Price Indexes can arise due to a number of methodological factors including differences in pricing points, timing, coverage and weights.
Commodity Price Indexes The RBA Commodity Price Index (average monthly index) for rural commodities decreased 0.2% between the June quarter 2016 and the September quarter 2016 while the EPI for rural goods increased 2.2%. The RBA Commodity Price Index for non-rural commodities increased 3.4% while the EPI for non-rural goods total (excluding non-monetary gold) increased 3.9%. Differences between the RBA Commodity Price Index and ABS price measures are largely a consequence of methodological differences used in the construction of the respective indexes, including coverage of included commodities and timing of source data. FOOTNOTES 1 In this commentary movements in indexes are based on data to four decimal places. <back 2 OECD Statistics Quarterly National Account, Organisation for Economic Cooperation and Development – Economic Department, viewed 16 November 2016. <back 3 MSCI Global Market Indexes 2016, Morgan Stanley Capital International, viewed 4 October 2016. <back 4 Bloomberg, Bloomberg Professional Service, viewed 6 October 2016. <back 5 Exchange Rates – Daily 2014 to Current, Reserve Bank of Australia - Statistical Tables, viewed 5 October 2016. <back 6 In this commentary movements in indexes are based on data to four decimal places. <back 7 Source: International Trade Price Indexes, Australia (cat. no. 6457.0). <back Document Selection These documents will be presented in a new window.
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