The economy is marking time at the moment, all the available evidence is telling us, including some out this morning.
First of all, Finance Minister Mathias Cormann issued the government’s first monthly financial statements, covering July and August. They show tax revenue tracking more than $3 billion lower than forecast. Now, most of that was offset by expenditure tracking below forecast as well, and it’s only two months so there’s no point making too much of the figures, but they at least suggest that the new financial year began the way the previous one ended, with tax revenue performing poorly.
The ABS also released Building Activity data for the June quarter. Both overall construction and residential construction rose a little in trend terms and fell in seasonally adjusted terms, with the most startling figure being a 0.7% seasonally adjusted fall in new residential building. That is problematic because what dragged it down was new house building, which fell 2.8% in the quarter seasonally adjusted and 1.4% in trend terms. That will continue to focus the Reserve Bank on the mix being generated by low interest rates between new home construction — which everyone wants — and rising prices for existing homes, which only home owners want.
Overall construction activity data was also released, showing private engineering construction continuing to fall in seasonally adjusted terms — no surprise there — albeit a little offset by a welcome rise in public sector residential and non-residential construction.
All that’s on top of yesterday’s meh September unemployment numbers: the headline unemployment rate fell but participation also fell and overall employment growth was underwhelming — just 9000 new jobs, seasonally adjusted, and aggregate monthly hours worked actually fell, seasonally adjusted, the first fall in four months.
All of this backwards-looking, especially the building data (although the August building approvals data showed no pick-up in the new financial year — but maybe there’ll be a post-election boost), and is really part of the last data from Labor’s time in office — its last GDP and CPI data are still to come. But it confirms that Labor and Treasury were right to downgrade economic growth and employment forecasts for the rest of this year. The news is by no means bleak — this is still a low inflation, low unemployment economy, but the transition from the mining investment boom is still not secured yet.
Treasurer Joe Hockey, Cormann and the RBA will be focused on ensuring that happens in the next couple of quarters.