The growth figures showed a 1% rise in gross domestic product in the September quarter in seasonally adjusted terms from the June quarter and a 4.3% rise over the year from September 2006 to the September quarter this year.
The June first estimate was 0.9% but that has been revised down to 0.7%, so the September quarter was stronger than first projected by most analysts.
That's the strongest rate of growth in recent years. But economists also pointed out that other revisions have cut around 0.7% from GDP growth since January, which points to less pressure on capacity and resources than previously thought.
But a worrying trend emerged in the most important statistic of all for our recent resources boom and economic performance. Our terms of trade fell for the first time in the quarter since 2001.
The fall was only 0.8% and it cut the improvement in the terms of trade over the 12 months to September to 2.9%, but it is a sign that the resources boom is maturing and running out of steam.
The terms of trade were steady in the June quarter, so we have now had six months of no growth.
Higher prices for coal and iron ore might change that next year but the global uncertainty is impacting oil and metal prices which could erode the terms of trade next year again.
The Australian Bureau of Statistics explained the shift in the terms of trade:
"The Terms of trade represent the relationship between the prices of exports and imports. An increase (decrease) in the Terms of trade reflects export prices increasing (decreasing) at a faster rate than import prices.
"The Terms of trade fell 0.1% in trend terms in September quarter, the first fall since December quarter 2000. The seasonally adjusted terms of trade fell 0.8% in September after remaining unchanged in the June quarter." the ABS said.
The terms of trade have been important in the past six years because the improvement has driven national income to grow faster than the overall economy.
The rise in the terms of trade helped produce more money and revenues to pay for all the goodies given away in tax cuts by the former Howard Government and helped underwrite the giveaways in the recent election campaign.
The ABS explains:
"A broader measure of change in national economic well-being is Real net national disposable income.
"This measure adjusts the volume measure of GDP for the Terms of trade effect, Real net incomes from overseas and Consumption of fixed capital.
"During the September quarter, trend Real net national disposable income increased by 1.0%, with growth over the past 4 quarters at 4.8% compared to 4.0% for GDP."
Trend is what it says, the direction indicated by the figures, as opposed to the seasonally adjusted numbers.
It means that national income rose faster than the economy, but the growth rate is slowing, which if it continues means problems ahead for the new Federal Government.
A contributing factor to the worsening terms of trade has been the strength in the value of the Australian dollar since February, which rose over 90 USc in the quarter and rose further in October. That has depressed import prices
The Aussie dollar fell yesterday under 87 USc for the first time in some weeks, down almost half a cent after the RBA left rates on hold. It then recovered to the 87 USc level, and then eased back under in overnight trading.
Should the Australian dollar ease next year it might taken the pressure off import prices and allow the terms of trade to further erode.
And, another interesting point from the national accounts is that amid the strong economic growth, the rising stockmarket and a solid housing sector in some states, Australians are saving again; net savings have now risen for two quarters in a row. That didn't happen in the early years of the decade and it is good news.
