Reserve Bank of Australia
March 2013
The Business Services Sector
The business services sector has become increasingly important in the Australian economy. The strong growth in its output and employment has been largely driven by demand for the professional, scientific and technical inputs that firms in this sector provide to other businesses. This, in turn, has reflected increased demand for the output of highly skilled labour by the mining industry and other parts of the economy, the increased use of outsourcing, and a range of technological developments.
GDP Revisions: Measurement and Implications
Gauging economic conditions in real time is challenging, in part because economic data are difficult to measure and subject to subsequent revision as more information becomes available. This article investigates the pattern and size of revisions to real gross domestic product (GDP) over the past decade or so. Revisions to early estimates of GDP can be large and, over the past 15 years, have tended to increase measured growth, although the extent of revision is in line with international experience. This article also examines the feasibility of adjusting real-time estimates of GDP for apparent patterns in revisions, predicting future revisions and calculating confidence intervals around the historical data. The uncertainty around real-time GDP estimates highlights the importance of monitoring a wide range of information when assessing current economic conditions.
Changes to the RBA Index of Commodity Prices: 2013
This article summarises changes to be made to the RBA Index of Commodity Prices (ICP). In line with developments in export values over recent years, the weight of iron ore in the index will increase, while the weights for coal, gold and base metals will be reduced. Overall, these changes will result in minimal revisions to the ICP. Given the greater attention being paid to bulk commodities in economic assessments, the Bank will publish additional indices that will capture movements in the spot prices and average export prices of these commodities.
Value-added Trade and the Australian Economy
Australia's trade linkages have been affected by the expansion of global production networks, with Australia typically exporting commodities that are used to produce goods and services that are, in turn, exported to other markets. In this article, estimates of value-added trade are presented for Australia that complement conventional trade statistics. The value-added trade estimates suggest that the United States and Europe are more important for export demand than implied by conventional trade statistics, as some Australian content is exported to those locations indirectly via east Asia through global supply chains. The value-added trade estimates also highlight the importance of the services sector to Australian trade, as the services sector is integral to producing goods exports.
The Resources Boom and the Australian Economy: A Sectoral Analysis
The increase in Australia's terms of trade since the mid 2000s gave rise to a surge in resource investment, an appreciation of the exchange rate, and a reallocation of labour and capital in the economy. This article examines the impact of the resources boom on the Australian economy in terms of three broadly defined sectors: the resources sector, the ‘other tradable’ sector and the non-tradable sector. While not all parts of the economy have benefited, the process of adjustment has proceeded much more smoothly than has been the case in previous terms of trade booms.
Funding the Australian Resources Investment Boom
Investment by the Australian resources sector has risen steadily since the early 2000s to be at record levels. Most of the investment has been made by publicly listed companies, with contributions split evenly between Australian and foreign listed companies. The funding for this investment has overwhelmingly come from the profits generated by these companies. External funding sources, such as new debt and equity issuance, have played only a limited role.
Developments in Banks' Funding Costs and Lending Rates
This article updates previous Reserve Bank research on changes in the composition and cost of banks' funding and the impact of these changes on lending rates (Deans and Stewart 2012). The main findings are that the absolute levels of funding costs and lending rates have fallen over the past year, while spreads between these rates and the cash rate have widened. This latter development primarily reflects a continuation of strong competition for deposits. Over recent times, this competition has shifted from term deposits towards at-call savings deposits, and customers have responded to the shift in the relative returns on these products. Although the recent narrowing of spreads on long-term wholesale debt will eventually put downward pressure on funding costs, developments in deposit competition will have a larger impact on movements in funding costs. Lending rates have tended to move in line with funding costs over the past 12 months.
Trends in Mobile Payments in Developing and Advanced Economies
As mobile phones have become commonplace throughout the world there has been an increasing focus on their potential use for making payments. Adoption of mobile payments in developing economies has occurred well ahead of that in advanced economies, reflecting the particularly large benefits these systems can provide in some economies. Advanced economies, including Australia, are now seeing the emergence of mobile payments, but generally following very different models to those that have become popular in developing economies. This divergence highlights the fact that mobile payments encompass a range of quite different payment types, each of which appeals in different circumstances.
The graphs in the Bulletin were generated using Mathematica.
ISSN 0725–0320 (Print)
ISSN 1837-7211 (Online)