The Australian economy is heading back to normal at a pace faster than anyone had thought a few months ago.
In fact it’s almost situation normal for the economy; the Reserve Bank is on rate watch positive, demand is fumbling along with employment mixed to weaker (as we will find out later today), consumption is subdued, but not depressed, house prices are rising, consumer confidence is exploding and export incomes are now taking a small turn for the better.
In fact it’s more a case of an action replay of years gone by, without the heady times of the long expansion, or the near terror of September through March as markets everywhere collapsed or went close to imploding.
The big slump in our terms of trade is now all but over, and from now on it will be the value of the Aussie dollar and market prices moves which drive much of the changes, and when it comes a sustained upturn in volumes.
But the impact of the surge, especially in iron ore and coal prices, plus oil and gas for a short while (and then the fall in oil prices), plus the recession which slashed demand for imports (along with the drop in oil prices), was dramatic, possibly as dramatic as Australian has ever seen.
The Australian Bureau of Statistics reported that in the year to June.
"For 2008-09, the balance of goods and services was a surplus of $5.8b. This is a turnaround of $29.4b on the 2007-08 deficit resulting from a $51.8b (22%) increase in exports offset by a $22.5b (9%) increase in imports of goods and services.
"Exports of non-rural and other goods were up $45.0b (29%) and rural goods were up $3.9b (15%) compared to 2007-08."
The year saw a series of big trade surplus which continued as imports fell under the impact of the slump. But from April onwards export income fell as new, lower prices kicked in on commodity contracts in Asia, especially coal and iron ore.
That saw trade deficits appear, but that trend seems to have eased, according to the June trade position from the ABS yesterday.
And as we reported yesterday, the Reserve Bank’s July Commodity Price Index suggests that the slump is over with a steadying in the index being reported after sharp falls for most of this year. That was after a big falls in May and June.
The RBA said that in Australian dollar terms, "the index is estimated to have been broadly unchanged in July, following a decrease of 3.8 per cent (revised) in June."
The RBA pointed to higher prices for iron ore aluminium and beef and veal; and revisions of previous big falls
Now the Australian Bureau of Statistics has confirmed that the nasty falls may be behind up with a 2% rise in exports in June leading to a sharp, 40% drop in the trade deficit from May.
"In seasonally adjusted terms, the balance on goods and services was a deficit of $441m in June 2009, a decrease of $296m (40%) on a revised deficit in May 2009, " the ABS reported.
The ABS said that seasonally adjusted, exports "rose $310m (2%) to $20,397m. Other goods rose $156m (13%) with the non-monetary gold component up $164m (17%). Non-rural goods rose $135m (1%), rural goods rose $22m (1%) while services credits fell $3m.
"Seasonally adjusted, imports rose $13m to $20,838m. Intermediate and other merchandise goods rose $247m (4%) with the fuels and lubricants component up $234m (13%). Consumption goods rose $207m (4%), capital goods rose $35m (1%) and services debits rose $27m (1%).
"These rises were partly offset by a fall in other goods, down $502m (48%), mainly due to a fall in the non-monetary gold component, down $336m (45%)," the ABS said.
"The sum of the seasonally adjusted balances for the three months to June 2009 was a deficit of $1,458m, a turnaround of $5,305m on the surplus of $3,847m for the three months to March 2009.
"However, if the seasonal factors used in compiling quarterly Balance of Payments are applied, the June quarter 2009 deficit was $1,667m, a turnaround of $5,934m on the revised March quarter 2009 surplus of $4,267m," the ABS said.
The balance of payments situation suggests that the trade account could make a small positive contribution to growth in the second quarter, on top of the small positive contribution from retail sales for the quarter.
