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ONLY CHARTS is a bit late today as we were at a speech by Australia’s Treasurer on productivity. There was little new in the speech…
1. …and something the Treasurer didn't mention today: the role of very high commodity prices in Australia’s productivity growth slowdown. It's #1 on the list BY FAR in our opinion.
The periods of weak labour productivity growth (2003-11 and 2016 -) coincided with sharp increases in Australia’s terms of trade.
Australia got away with it because the per capita INCOME boost from higher commodity prices has been substantial (bottom panel).
If you don't believe us, this from former Treasury Secretary Ken Henry in a recent speech:
Have a listen to Ken, it’s highly recommended.
2. Hourly wage rates in Australia rose 0.8% q/q and +3.5% y/y in Q3 - in line with expectations but a bit under the RBA’s latest SMP forecast.
