I would believe this more.... This story has credibility
Economic signs point to upturn
SURGING exports and a big lift in new building approvals are fuelling hopes that economic growth this year will be stronger than forecast, defying Treasury’s predictions of an ongoing slowdown.
Both private-sector housing and non-residential building approvals have risen by more than 20 per cent, surpassing levels from before the global financial crisis for the first time, while record shipments of coal and iron have returned the trade account to a surplus.
Reserve Bank governor Glenn Stevens pointed to improving business confidence and trading conditions along with an encouraging global outlook yesterday, following the bank board’s decision to keep the official cash rate at its record low of 2.5 per cent for an eighth consecutive month.
Mr Stevens flagged that rates were likely to remain at this level for some months yet, commenting that “the most prudent course is likely to be a period of stability in interest rates”.
The Australian Bureau of Statistics today will release national accounts showing whether there was any lift in growth in the December quarter. Most economists expect they will still show activity levels were subdued.
However, a run of recent indicators, including yesterday’s building approvals and trade figures, show the economy is at a turning point, with better conditions ahead.
Commonwealth Bank chief economist Michael Blythe said yesterday: “The leading indicators are starting to look positive. We’ve seen the big lift in housing loan approvals and that has flowed through to local government building approvals. The next step should be actual construction activity.
“What is encouraging is that it is not just a residential story, but there is a big lift in the non-residential sector as well. These are the two key parts of the economy you need to get moving to offset the inevitable downturn in mining capital spending.”
The signs of the economy gaining strength, which first started appearing in business surveys three months ago and have also been evident in improved retail sales, contrast with the problems confronted by a series of trade-exposed businesses that have been seeking government assistance.
Mr Stevens confirmed that the Reserve Bank still expected to see a further increase in the unemployment rate from its current level of 6 per cent. However the bank believes the jobs figures lag trends in the economy.
More forward-looking indicators have been encouraging, with the ANZ’s latest survey of job advertisements showing the first increase in more than a year.
Mr Blythe said the government’s budget figures for December, which were released on Friday, showed that its PAYG tax receipts were rising much more quickly than suggested by the published jobs figures.
Tax paid by individuals averaged 6 per cent growth in the December quarter, although official figures showed employment was at a standstill and wages were rising at only 2.5 per cent.
“You don’t pay tax unless you’re earning income,” Mr Blythe said. “It may be another indicator that we’re at a turning point.”
Today’s national accounts are expected to show the economy was still growing at a below-trend rate of about 2.6 per cent in the December quarter, although economists caution that the quarterly figures are difficult to predict with accuracy, as the ABS often makes large revisions to previous reports.
Treasury’s mid-year budget update anticipated growth would average 2.5 per cent both in this financial year and in 2014-15.
The biggest contributor to growth is likely to be exports. The volume of goods exported rose by 6.9 per cent over the past year, while import volumes were 4.1 per cent lower. As resource companies complete their expansion projects, imports of capital equipment are falling sharply, while new mines coming into production are lifting exports.
The growth in exports was led by iron ore and coal, however even manufacturing achieved some growth, helped by the lower value of the Australian dollar. Shipments of manufactured goods reached $7.5 billion, up 3.5 per cent from a year earlier.
The trade account recorded a small surplus of $250 million in the December quarter, the first since 2011, but economists expect this will build over the next two years, with the commissioning of LNG plants bringing Australia’s overall balance of payments close to surplus for the first time.
Although the lift in exports will boost growth, this phase of the resource boom is less labour intensive than project construction and will add to pressure on employment. The Reserve Bank and Treasury are likely to be cheered by the lift in both housing and non-residential building approvals.
A record $12.6bn in new housing projects was approved in the December quarter, which was 24.4 per cent higher than a year ago. (under Labor) Apartment developments are 48.5 per cent higher, individual housing approvals are 8.7 per cent ahead.
THe head winds Hockey was warning about since the "Age of Entitlement" speech was ignored by Swannie and all Labor and now we are blessed with a more adult government trying to rein in waste and subsidies.
Go figure why that's not good news...
Oh No !!!!! not more good news?? I'm happy the economy is looking brighter but then that's just me 
