IT DEPENDS WHERE YOU LIVE
South East Australia 5.0%
- NSW 4.6%
- Victoria 5.5%
North West Australia 10.9%
- Queensland 9.2%
- Western Australia 12.8%
South East Australia 2.9%
- NSW 4.3%
- Victoria 1.4%
North West Australia 14.6%
- Queensland 16.9%
- Western Australia 12.4%
Seasonally adjusted, year to December ABS 5676.0
A sharp geographic divide has opened up in business conditions, with the latest Bureau of Statistics report showing sales growth five times as fast in Australia’s north west as the south east and wage growth twice as fast.
The business indicators report, one of the building blocks for the National Accounts to be released tomorrow show sales growth over the year to December of 14.6 per cent in Queensland, the Northern Territory and Western Australia combined compared to just 2.9 per cent in NSW, Victoria, South Australia, the ACT and Tasmania.
Wage growth averages 10.9 per cent in the north west mining states compared to just 5 per cent in the south east.
The divide will be up for discussion at this morning’s Reserve Bank board meeting in Sydney, the first to be attended by Heather Ridout, chief executive of the Australian Industry group who replaced BlueScope Steel chairman Graham Kraehe in February.
Appearing before the parliament’s economics committee last month Reserve Bank governor Glenn Stevens lamented the “very disparate and very powerful forces” at work in the economy and said monetary policy could not make them go away.
“This is a message that does not really gladden too many people's hearts,” he told the committee... “Monetary policy is a national policy. We have one instrument—one currency. We are a currency area and we cannot make the differences go away.”
The board is almost universally expected to leave rates on hold when it announces its decision at 2.30 this afternoon. Even futures pricing, which typically overstates the likelihood of a cut, ascribes just a 15 per cent probability to a cut and an 85 per cent probability to rates staying put.
The ABS says company profits barely grew in 2011, inching ahead just 2.1 per cent; the worst result in more than a decade with the exception of the global financial crisis in 2009 in which profits slid 13.7 per cent.
In the December quarter company profits fell 6.5 per cent, led down by a halving in profits in financial, insurance and other services, a 9 per cent dive in mining profits and a 5 per cent fall in manufacturing profits. Profits in the administrative and support sector climbed 12 per cent and utilities profits climbed 5 per cent.
Wages and salaries climbed just 0.8 per cent in the quarter, largely reflecting higher salaries and employment was little changed.
Inventory levels climbed 1.4 per cent, led by 2.2 per cent increase in mining inventories as sales fell.
The TD Securities gauge climbed just 0.1 per cent in February to be up 2.0 per cent over the year, a weak enough reading to allow the Reserve Bank board to cut rates if it was minded to.
The Australian Industry Group performance of services index slumped 5.3 points in February 46.7 where a reading below 50 points to further contraction. The ANZ job advertisement index is more encouraging, climbing 3.3 per cent in February after rising by 7.5 per cent in January.
Published in today's Sydney Morning Herald and Age
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