While assessing the national accounts data is very much like looking in the rear window, it can provide good perspectives on a range of issues.
For instance, productivity data is included in the accounts but the estimates are generally not available elsewhere. Another issue is state or territory economic performance. Again, apart from the national accounts, there is no regular publication showing how fast each of the states and territories are growing.
And then there is consumer spending. Now you may say that this information is available on a regular basis from a range of sources. But the problem is that the information doesn’t reveal the big picture.
For instance retail trade accounts for only a third of total household spending. Far more is spent on services nowadays.
How much? Well we estimate that goods account for around 40% of all spending with services taking 36% and housing and utilities taking the remainder. Our income levels have been rising over time and the relative price of goods has been falling in relation to both services and wages. The other point is that so-called ‘essentials’ such as food, clothing, alcohol, tobacco and transport account for just 27.4% of all spending – the smallest proportion on record.
The world is changing – so much so that public transport now occupies a bigger share of our spending than buying a car.
The week ahead
In Australia in the coming week the spotlight shines on lending and confidence. In the US, investors will have to wait late in the week for key economic data. However the Federal Reserve meeting dominates mid-week. And Chinese economic data kicks off proceedings on Sunday.
On Monday, the July data on new housing loans (commitments) is issued. In June, loans soared by 1.3%, the biggest increase in 32 months and underpinned by rate cuts in May and June. But data from the Bankers Association suggests that the strength didn’t continue into July with a flat result tipped.
On Tuesday, the NAB business survey is released together with the lending finance release and the quarterly Crop report from the Government’s ABARES analysts. The lending data is the most comprehensive measure of new lending, and recent data showed that car and lease loans were in vogue. Meanwhile the July NAB survey showed that businesses were more confident despite a deterioration of business conditions. Another mixed result is probably on the cards.
On Wednesday, the September consumer confidence report is issued by Westpac and the Melbourne Institute. The weekly Roy Morgan report will come out earlier in the week and, as shown last month, sometimes the indexes diverge. But overall it is clear that confidence is flat-lining at present. The Westpac/Melbourne Institute survey will also include a question on the wisest places to invest.
Also on Wednesday, data on dwelling starts (commencements) is issued alongside the Reserve Bank’s data on debit and credit card lending. The dwelling starts data can prove volatile and can be affected by state government decisions about taxation and government grants. In the March quarter, starts slumped by 12.6%, with big declines in NSW, the ACT and Tasmania. Interestingly this will be the last issue of the publication, although the data will be released elsewhere.
The credit and debit card data should confirm that credit card use is still on the outer, with people preferring to use their own money when buying goods and opting to take cash out when making purchases.
On Thursday, the Bureau of Statistics provides more detailed estimates on job market trends with most interest on the employment by industry figures – that is, the data showing where the jobs are being created and lost. The Reserve Bank will also issue its quarterly Bulletin on Thursday.