The last time Australia recorded a current account deficit as small as the one for the June quarter, we were coming out of the slowdown in the early years of last decade.
Demand was weak, imports were down substantially and imports were rising, especially into Asia.
This time the trade surplus and low current account deficiency were recorded with exports, especially those of iron ore coal, and LNG going gangbusters, especially into Asia and China in particular.
While the shape of the current improvement was outlined in the June monthly trade data at the start of this month, yesterday’s current accounts provided the final detail.
And the ABS added that the improvement from the narrowing of the deficit would add 0.4% growth to the national accounts for the June quarter out later this morning.
That’s a bit lower than the initial estimate of 0.5% given in the trade account from the Australian Bureau of Statistics.
The ABS said Australia had a seasonally adjusted current account deficit of $5.64 billion in the June quarter, a big fall from the downwardly revised deficit of $16.457 billion in the March quarter.
The market forecast was for a deficit of around $6.5 billion in the June quarter.
Australia reported a record trade surplus of $3.5 billion in the month of June. The July figures are out tomorrow.
The current account data adds to the wages, salaries, company profits and inventory figures released on Monday.
That showed a rise in profits, moderate growth in wages and salaries and weaker than expected inventory growth.
Company gross operating profits, in current prices, rose 18.9% in the June quarter, seasonally adjusted, and were up 27.5% over the year, according to the ABS.
A surge in mining profits led the way (which is not surprising).
Estimated business inventories, in seasonally adjusted chain volume terms, fell 0.5% in the June quarter after rising 0.5% in the March quarter.
Wages and salaries were up 2.2% in the June quarter.
So they will add growth to the income side of the national accounts, but that’s about all.
Manufacturing sales fell 6.9%, while wholesale sales were down 2.7%, which will be negatives.
Also yesterday the ABS released government finance details for the quarter, which are another part of the national accounts.
The ABS said government spending rose in the June quarter.
Total government spending, including consumption and capital formation, was up by 1.3% in seasonally adjusted chain volume (inflation-adjusted) terms in the June quarter compared with the March quarter.
The estimates correspond to the public sector aggregates accounting for about 21% of gross domestic product (GDP).
Accordingly, economists say this small rise should add about 0.3 of a percentage point to GDP growth in the quarter.
The ABS said Australia’s net International Investment Position (IIP) rose $4.2 billion in the June quarter to $763.5 billion.
Our net foreign debt liability increased $14.1 billion to $671.9 billion and the net foreign equity liability fell $10 billion to $91.6 billion.
Forecasts for GDP growth in the June quarter range from around 0.5% to 1.1%. Try the range 0.6% (which is the RBA’s thinking) and 0.8% which is around what the market median has been in the past week.
