The December quarter national accounts were released today, reinforcing the trends noted in the second part of my original post. Overall the year to December 2011 GDP growth figure was a fairly weak 2.3%. Here is a good summary taken from an article by economics correspondent, Peter Martin (link):
Economic growth has failed to live up to expectations. Gross domestic product climbed just 0.4 per cent in the December quarter to give Australia annual growth of 2.3 per cent, much weaker than the 2.75 per cent expected by the Reserve Bank.
GDP per person scarcely moved, climbing 0.1 per cent in the quarter to be up 0.9 per cent over the year. Prices were flat, suggesting zero inflation in the quarter. Almost all the economic growth was concentrated in Australia’s three mining states. Over the past year demand has climbed 11 per cent in Western Australia, 10 per cent in Queensland, and 6 per cent in the Northern Territory.
In NSW it has climbed just 2 per cent, in Victoria 1.6 per cent and in the ACT 2.6 per cent. In South Australia and Tasmania demand is shrinking, going backwards 0.6 per cent and 0.7 per cent.
Today’s figures show the economy growing extremely fast in some states and painfully slow in others, failing to make trend overall.
There was a widely reported publication by Dun and Bradstreet last week of some pretty terrible year on year figures for corporate and personal insolvency. A link to the report can be found here.
The key findings reported by Dun and Bradstreet were:
- Nationwide, insolvencies rose 42 per cent year-on-year while the number of new businesses fell 11 per cent over the same period;
- Small business failures grew 57 per cent over the year among firms with less than five employees and 40 per cent over the year among firms with six to 19 employees;
- Small business start-ups among firms with less than five employees fell 95 per cent in the year;
- Failures were most pronounced within the service (up 58%), finance (up 58%) and construction (up 66%) sectors; and
- There was virtually no start up activity in the manufacturing, service and finance sectors during the December quarter.
I think the increases in insolvencies need to be viewed with a grain of salt – anecdotally, there is evidence that the ATO has been much more active in the last 12 months after a recoveries pause imposed after GFC I.
The other interesting statistics were the almost anemic levels of growth in the non mining states in the same period. According to statistics quoted in an article by Tim Colebatch last week (link):
- In the year to September 2011, domestic demand (that is, spending) grew by 4.2 per cent (faster than GDP, which was at 2.5%, because so much of the new spending was on imports);
- Demand grew by 13 per cent in Western Australia and 8.2 per cent in Queensland;
- In NSW, Victoria, Tasmania and South Australia, demand grew by between 0.1 and 1.7 per cent;
- On a per capita basis, outside the mining states, spending per head was virtually flat for the year to September 2011.
- 77 per cent of the growth in spending over the year was in WA and Queensland, which has 30 per cent of the population. Only 23 per cent was in the rest of Australia, which has 70 per cent of the population.
- Since the start of the GFC, Australia has added 92,000 jobs in mining and 62,500 in construction. But by November it had lost 127,000 jobs in manufacturing, almost as many as in the entire 1990-91 recession.