How good is it at the moment for corporate Australia?
Business profitability, as measured by corporate gross operating surplus, rose by 4.4 per cent in the quarter to be 13.9 per cent higher than a year ago.
The March quarter business indicators on Monday showed a solid 2.1 per cent growth in gross operating profits (it was higher because of the Telstra privatisation but this figure assumes Telstra was included in the December quarter).
Yesterday's national accounts hammered home that point:
Profitability is strong in a number of industries including transport, property and business services, manufacturing and retail trade.
And at 28.1 per cent, the profit share of the economy is at a record level.
No you won't hear anyone in business complaining about that. And with the June 30 profit season due to start in about six weeks to two months, there should be few companies with any rational excuse for reporting lower than expected earnings.
Nor will you hear anyone on business mentioning that the wages share fell to 53.2 per cent,its lowest level since 1979 and down three percentage points over the last six years!
Wages are not a worry, despite attempts in some quarters to turn them into the next threaqt to the boom.
The Australian economy and Australian business are now in a set of circumstances they have rarely been before.
Reflecting the improved profits and prospects business investment grew strongly in the quarter.
Private business investment increased by 7.6 per cent (quarterly growth was affected by the reclassification of Telstra from the public to the private sector).
The ABS said that adjusting for the effect of Telstra, private business investment increased by 4.8 per cent in the quarter. Engineering construction is continuing to grow strongly. (No wonder the likes of Leighton Holdings has seen its share price more than double in less than a year).
The drought though continued to subtract from growth with farm production falling by 22.7 per cent over the past year.
Household consumption rose by 1.5 per cent in the March quarter to be 4.2 per cent higher than a year ago.
That's driven by rising wages, rising job numbers (especially full time) and even housing is doing better, showing a marked improvement.
Dwelling investment increased by 1.5 per cent in the March quarter, reflecting an increase of 4.7 per cent in new and used dwelling investment. Dwelling investment is now 9.5 per cent higher than a year ago, after falling by 5 per cent over the previous year.
Driving all of this are our terms of trade.
According to the National Accounts they are currently at their highest level since the 1950s.
As a result (and despite the continuing trade deficit) the continuing improvement in the terms of trade has seen strong growth in national income, with real gross domestic income growing by 1.9 per cent in the quarter to be 5.4 per cent higher than a year ago.
Exports rose by 1.4 per cent in the March quarter to be 4.7 per cent higher than a year ago.
A fall in rural shipments of 7.9 per cent in the quarter was more than offset by increases in other exports.
Resource exports – led by coal, coke and briquettes – were up by 2.4 per cent in the quarter to be 7.5 per cent higher than a year ago, while exports of elaborately transformed manufactures increased by 4.4 per cent in the quarter to be 6.7 per cent higher than a year ago. Imports increased by 2.2 per cent in the quarter reflecting strong growth in business investment and household consumption.
And inflationary pressures remained modest with household consumption chain price index rising 2.2 per cent over the past year to March (which is consistent with March quarter CPI of 2.4 per cent).
Federal treasurer, Peter Costello said: "The Australian economy is in the midst of its longest economic expansion since Federation. Since 1996 real wages have increased 20.8 per cent.
"Strong investment growth is expanding the economy's capacity and will sustain growth in the period ahead.
"The orderly adjustment to the strong terms of trade demonstrates the increased flexibility and resilience of the Australian economy. It underscores the importance of flexible wage fixing at an individual and enterprise level.
"Sound economic management has led to Australian households enjoying a combination of the lowest unemployment rate in 32 years, solid growth in real wages and low inflation."
Looking through the electioneering in those comments, his underlying point has a deal of truth to it
But far from being a case of 'we've never had it so good' which is hubristic and an invitation to forget what it's all about, our present economic position has been won by a lot of hard effort, tough decisions, especially in the 1980s and 1990s; and China and our enormous store of commodity wealth.
We should never forget that serendipitous linking of China's emergence as an industrialising power and our huge reserves of commodities.
It's really all about managing that trade, which is going to grow for sometime yet, and the enormous injection of wealth at our end it is bringing.
