Much hand wringing around the markets this morning with the larger than expected current account deficit.
The five per cent rise in the deficit to $12.71 billion from $12.1 billion last quarter and the $11.55 billion previously is a big miss.
But much of this is due to a big move in the “Primary Income” position which added $706 million to the deficit in the September quarter printing a deficit of $9.619 billion seasonally adjusted.
The ABS says that Primary Income includes employee compensation, dividends, reinvested earnings, interest, investment income for insurance contracts, rent and taxes and subsidies.
The underlying data looks pretty solid.
Here are some highlights
- The balance on goods and services rose 51% to a surplus of $8.46 billion. This is expected to add 0.7 percentage points to GDP for Q3
- The price deflator in the terms of trade fell 0.9% in trend terms
- Metal ores and minerals saw volumes up 2% and prices up 5%
- Manufactures likewise saw volumes and prices rise 2% and 3% respectively
- Just like retail sales suggested this morning consumption goods rose 6%
- Capital goods were flat – which isn’t a bad result but volumes were down and prices up
The capital account showed that foreigners injected $15.1 billion into the Australian economy with $17.8 billion of bond buying offsetting $2.6 billion of stock selling.
$12.7 billion is a big number for the quarter but in the break up of these data you can see where the economy is mending.