Slow credit growth, falling export prices and a drop in home-building approvals – it was hardly an encouraging set of economic data on Thursday. But it was a pretty good illustration of the problems facing the economy.
A 7.9 per cent fall in the export price index in the June quarter, reported by the Australian Bureau of Statistics on Thursday, was dominated by weaker minerals markets. It extended the fall to since the peak in 2011 to 15 per cent. The fall has been partially cushioned by a lower exchange rate. In foreign currency terms, export commodity prices have dropped over 30 per cent in just three years, according to the commodity price index compiled by the RBA.
But the hit to export revenue will still drag on the economy, accentuating the impact of the slowdown in resource sector investment. The building industry is one of the great hopes for the economy’s transition away from mining, the so-called rebalancing.