GDP figures to show productivity growing | WA Business News

The June quarter national accounts should confirm that reports of the death of productivity have been greatly exaggerated.

The accounts, including their headline estimate of gross domestic product (GDP), are due from the Australian Bureau of Statistics (ABS) on September 5.

The way things are shaping up, the odds favour a solid rise in GDP in the quarter of between 0.5 and 1.0 per cent.

A figure in the middle of that range would vindicate the latest forecast by the Reserve Bank of Australia (RBA), in its quarterly monetary policy statement last week, of above-average GDP growth of 3.75 per cent for the year to the June quarter.

One interesting consequence of that would be that - because we already have estimates of hours worked from the ABS - GDP per hour worked will have risen by about three per cent.

In other words, GDP per hour worked, the broadest gauge of labour productivity, would have posted a gain close to twice its long-run average.

And it would make the average annual rise in in this measure of productivity over the latest five-year period - between the June quarters of 2007 and 2012 - about one per cent.

Aside from the drag from the mining sector's ongoing productivity slump and over-investment in the utilities sector, factors that are well known to have biased labour productivity downwards, growth in GDP per hour should turn out to be close to 1.2 per cent a year.

That would be a step down from the 1.7 per cent annual average for the preceding 10 years.

Considering the recent slowdown in GDP growth, amid a global financial crisis and recession, to a 2.4 per cent annual average in the latest five years - compared with 3.6 per cent in the 10 years prior - it is entirely to be expected. Especially so, considering an even faster slowdown outside the mining sector.

And when the economy picks up after a slowdown, so does labour productivity growth.

The economy's strong rebound over the year to March, and the biggest annual surge in labour productivity for over a decade that came with it, is a timely reminder of that.

The June quarter national accounts, which will bring news of above-average annual growth in both GDP and labour productivity growth, will add to the evidence that labour productivity is alive and kicking.

Source: http://www.wabusinessnews.com.au/article/GDP-figures-to-show-productivity-growing

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