Treasurer Scott Morrison trumpeted the September national accounts as a sign of “better days ahead”. It was really a case of more of the same, along with a few signs businesses are finally starting to invest a bit more.
The economy grew 0.6 per cent in the September quarter — probably enough to keep the budget on track to deliver a surplus in 2021 — but stripping out the extra people, it rose only 0.2 per cent.
More people mean more jobs, more spending and higher GDP growth.
The bounce in the annual growth rate from 1.9 per cent to 2.8 per cent, just shy of its long run average rate, was built on the same surge in low-paying jobs that is enveloping the UK and US economies, where unemployment rates have fallen even lower than here.
The economy generated 100,000 jobs over the three months to September — 1000 a day, as the Treasurer kept reminding attendant scribes — which ensured the economy’s’ wage bill swelled 1.2 per cent.
That’s no mean feat but per employee the increase was a more meagre 0.3 per cent, which underpins the contrast between voters’ mood and rosy headline growth figures. Despite all the extra people and jobs, households lifted their consumption by just 0.1 per cent in three months, the slowest rate in years.
Strong global demand for Australia’s commodities continues to flatter the national accounts, including this time unusually strong Indian and Chinese demand for chick peas and citrus fruits, respectively, this quarter.
Non-housing construction jumped more than 18 per cent in a single quarter.
Economist Sarah Hunter said the flattering surge in non-housing construction “likely came from the installation of two LNG platforms in Western Australian and Northern Territory”. There aren’t many well-paying jobs in completed gas export facilities.
The Treasurer’s office assures us it’s more broadbased than that. We’ll see.
Federal and state governments’ stampede to build new infrastructure helped too. The feds are spending $75 billion over a decade, two thirds of which is going to the states.
More investment, public and private, is welcome, but keep in mind NSW’s decision to rebuild a stadium at a cost of billions is classified as “investment”, as is federal government’s NBN rollout. Don’t take the national accounts at face value.
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Growth up, again! The government put a positive spin on the September national accounts today, but it doesn’t take economic genius to achieve “jobs and growth” — the Coalition’s central promise — in a country with practically the strongest population growth in the developed world.