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GDP data: while Hockey lamented, the economy picked up

The economy picked up in the December quarter, confirming that the picture painted by Joe Hockey last year was far worse than reality, Glenn Dyer and Bernard Keane write.

The Australian economy isn’t the basket case Treasurer Joe Hockey, the rest of the government, business groups and their media mates have been claiming since the gloomy mid-year outlook was released last December, it turns out. Economic growth picked up in the December quarter, ABS national accounts showed this morning, with growth of 0.8% seasonally adjusted — stronger than it was in the three months to September (0.6%).

In his first few months as Treasurer, Hockey first warned us of the dire threat to growth from offshore — back when he announced he was lavishing $9 billion on the Reserve Bank — and then after he took the lowest possible forecasts from Treasury for the Mid-Year Economic Forecast in order to portray himself as Hercules cleaning out the Augean stables left to him by Labor.

Today’s numbers, though, suggest Hockey was more Chicken Little. Growth through all of 2013 was a much stronger 2.8% compared to the annual rate of just 2.3% in the September quarter. The 2013 growth rate was much closer to the 3.1% growth seen in calendar-year 2012 and makes a mockery of the gloom not just from Hockey but even from the unions and Labor, anxious to portray the government as killing the economy through being unwilling to keep handing out money.

But when Hockey held his MYEFO media conference on December 17 last year to detail the contents of what appeared to be a “slit your wrists” assessment of the economy, the real thing was gathering pace — that’s what successive figures for retail sales, exports, the National Australia Bank’s business surveys and quite a few other measures show. Against that there was negative jobs data, looking like it would worsen in line with forecasts before it would improve. But the turmoil over the Holden announcement had little impact on consumers: they started using savings (the household savings ratio fell below 10% for the first time since mid-2010), spent more in shops, on property and overseas travel.

The only gloomy spot, which we knew about from last week’s capital expenditure data, was for private investment: gross capital formation — a measure of investment in the economy — was -0.5%. But thanks to the weakening dollar, the terms of trade rose 0.6% in the quarter as export volumes rose and import volumes fell (net exports added 0.6%). Final consumption expenditure came in at 0.5% — much stronger than many business economists had forecast — thanks to the surge in retail spending in the closing months of 2013 and the real estate boom.

Mining contributed to the growth (1.2% because of the rising level of exports), while manufacturing (1.5%), rental, hiring and real estate added a combined 4.2% (not unexpected given the surge in property prices and activity).

GDP per hour worked also lifted yet again, providing yet more evidence of the sustained period of labour productivity growth delivered under the Fair Work Act — up 0.6% in the quarter and 1.7% throughout the year, and slightly higher in the private sector. And unit labour costs fell 0.7% as well.

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  • 1
    klewso
    Posted Wednesday, 5 March 2014 at 1:13 pm | Permalink

    Best Actor” didn’t go to Joe Shockey for “12 Years a Slave to Political Hyperbole”?

  • 2
    Jimmy
    Posted Wednesday, 5 March 2014 at 1:21 pm | Permalink

    The libs “the ALP left us a basket case” “and the carbon tax is killing growth” mantra’s are once again shown to be completley false however there are some worrying signs for the economy - the increasing unemployment rate, the negative capex figures, Hockey’s constant talking the economy down and worst of all the looming contractionary budget all will impact future quarters rather then the December quarter.
    Joe may yet get his wish of an economic basket case, but it won’t be the fault of the ALP.

  • 3
    extra
    Posted Wednesday, 5 March 2014 at 1:57 pm | Permalink

    We should expect the Coalition to keep up the economic doom and gloom until the carbon tax is repealed. Then, and only then, they’ll begin acknowledging that things have picked up, and take the credit for it.

  • 4
    Jimmy
    Posted Wednesday, 5 March 2014 at 1:59 pm | Permalink

    extra - Once the Carbon tax is repealed they will credit it for everything, after all any issue raised in parliament so far has been supposedly fixed by repealing the carbon tax.

  • 5
    Jimmyhaz
    Posted Wednesday, 5 March 2014 at 2:29 pm | Permalink

    The fact that the Australian economy is showing any positive signs at all with the current governance is a testimony of its underlying resilience. It’s unfortunate that these signs will become rarer and rarer, and through no fault whatsoever of the private sector.

    It’s only a matter of time before it all goes down the toilet, and I don’t think that the LNP will be able to portion any of the blame other than where it lies, squarely at their feet.

  • 6
    MJPC
    Posted Wednesday, 5 March 2014 at 3:30 pm | Permalink

    I am excitedly awaiting the repeal of the carbon tax after Uncle Joe’s and Citizen Abbott’s pronouncements it is the cause of every ill. Extreme weather events will end, everything will be cheaper (cars, aluminium, Qantas airfares, electricity, gas; especially CSG derived; indeed, the air we breath probably)and everyone in Australia will be heading to their first million (if they haven’t made it already) from all the money that will be returning to their pockets, unless you are on welfare, a public servant, fighting on the Green front or any worker on average incomes.

  • 7
    klewso
    Posted Wednesday, 5 March 2014 at 4:39 pm | Permalink

    Shockeynomics”

  • 8
    Bill Hilliger
    Posted Wednesday, 5 March 2014 at 7:35 pm | Permalink

    Sadly for Tony Dr No Abbott and Joe Foghorn Hockey, despite the big bad poisonous carbon tax the economy did ok.

  • 9
    tonyfunnywalker
    Posted Wednesday, 5 March 2014 at 7:36 pm | Permalink

    The problem with the economy is Joe Hockey - the aspirational pessimist.

  • 10
    AR
    Posted Thursday, 6 March 2014 at 9:30 pm | Permalink

    As if Sloppy hadn’t been ridiculed enough the first time he spoke of the urgent need “to lift the tide (that lifts all boats..)”.
    In Thursday’s Questions he repeated the same meaningless banality.
    Then Clarke & Dawe, in their inimitable way, used Abbott’s own repetitious words, carbon tax, boats, and it was excruciating. Nothing was exaggerated.

  • 11
    Phil Buckley
    Posted Friday, 7 March 2014 at 12:32 pm | Permalink

    Yet again Jihad Joe , Australia’s very own economic suicide bomber tries to attack the wrong target. Keep it up Joe you are really given Mr Bean a run in the credibility stakes.

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