- SNA, 2008, para 8.25.
Latest release
Chapter 20 Analytical measures
Australian System of National Accounts: Concepts, Sources and Methods
Reference period
2020-21 financial year
Released
9/07/2021
Introduction
20.1 This chapter outlines some of the analytical measures derived from national accounting aggregates.
20.2 These measures include:
- real income measures
- real unit labour costs
- analytical measures of income, consumption, saving and wealth (national estimates are annual only, household estimates are available quarterly)
- farm and non-farm GDP
- income related measures
- gross entrepreneurial income (annually only)
- analytical expenditure aggregates
- inventories and sales (quarterly only).
Real income measures
20.3 The real income measures are a series of aggregates which measure the purchasing power of various income flows in the national accounts.
20.4 Income flows in the SNA (e.g. cash transfers or saving) are measured in nominal, monetary units and are not directly related to prices or quantities of goods or services. Income can be used to purchase goods or services, however, and is often defined as ‘the maximum amount that a household, or other unit, can consume without reducing its real net worth’¹⁰⁵. Real incomes measure the amount of goods and services that can be purchased with an income flow.
20.5 A numeraire is a set basket of goods and services. To measure the purchasing power of an income flow over a numeraire, the price of the numeraire in a specified reference period is used to deflate the nominal income value. Change in the deflated value of income over time, in comparison to the reference period, therefore measures change in the purchasing power of the nominal income flow over the numeraire. Real incomes are deflated in this way.
20.6 As GDP is a measure of the income generated in the economy by production, if GDP can be deflated, then real GDP is also a measure of real income. In this case, the numeraire is the set of all goods and services produced in the domestic economy. However, to move from domestic product in volume terms to national income in real terms, the power of income to purchase goods and services from the rest of the world also needs to be considered.
20.7 In a closed economy, without exports or imports, GDP is equal to the sum of final consumption and capital formation (otherwise known as domestic final demand). In this case, real GDP is an appropriate measure of the purchasing power of the income generated from domestic production. However, in an economy which is open to imports, and exports domestic production, the total real income that residents derive from domestic production also depends on the rate at which exports may be traded against imports from the rest of the world.
20.8 The terms of trade is the ratio of the price of exports to the price of imports. If the prices of a country’s exports rise faster (or fall more slowly) than the prices of its imports (that is, if its terms of trade improves), fewer exports are needed to pay for a given volume of imports. This means that at a given level of domestic production, goods and services can be reallocated from exports to consumption or capital formation. An improvement in the terms of trade therefore makes it possible for an increased volume of goods and services to be purchased by residents out of the incomes generated by domestic production.
20.9 The usual way to calculate real income figures is to start from real gross domestic income and add iterative adjustments deflated to real terms. The measures calculated are:
- real gross domestic income
- real gross national income
- real net national disposable income
- real net national disposable income per capita.
Real gross domestic income
20.10 Real gross domestic income (real GDI) measures the purchasing power of the total incomes generated by domestic production.
20.11 When the terms of trade changes there may be a significant divergence between the movements of GDP in volume terms and real GDI. This difference is described as the ‘trading gain’ (or loss). Alternatively, the trading gain or loss from changes in the terms of trade is the difference between real GDI and GDP in volume terms. If imports and exports are large relative to GDP, and if the commodity composition of the goods and services that make up imports and exports is very different, the scope for potential trading gains and losses may be large. This may happen, for example, when the exports of a country consist mainly of a small number of primary products, such as cocoa, sugar or oil, while its imports consist mainly of manufactured products. Trading gains or losses, T, are usually measured by the following expression:
\(\large T = \frac{{X - M}}{P} - \left( {\frac{X}{P_x} - \frac{M}{{{P_m}}}} \right)\)
where
\(X\) = exports at current values
\(M\) = imports at current values
\(P_x\) = the price index for exports
\(P_m\) = the price index for imports
\(P\) = a price index based on a numeraire
20.12 \(P_x\), \(P_m\) and \(P\) all equal 1 in the base year. The term in brackets measures the trade balance calculated at the export and import prices of the reference year, whereas the first term measures the current trade balance deflated by the numeraire price index. One may have a different sign from the other.
20.13 The 2008 SNA leaves the choice of the price index used to deflate the current trade balance to individual national statistical agencies. In Australia, the price index, \(P\), reflects import prices. As trade facilitates consumption of a different mix of products than are produced domestically, and exports generate income which finances the acquisition of imports, the price of imports is an appropriate deflator for the trade balance.
20.14 Real GDI is calculated by summing the volume measures of gross national expenditure (GNE), the statistical discrepancy for GDP(E) (SD), and exports and subtracting imports. Exports are first deflated by the imports deflator to account for the terms of trade.
\({Real \ gross \ domestic \ income} = GNE + SD{\rm{ }} + deflated\ {\rm{ }}X - M\)
20.15 The chain volume measure is then benchmarked to the annualised real GDI estimate.
Real gross national income
20.16 Real gross national income (GNI) measures the purchasing power of gross primary incomes for all institutional sectors, including net primary income receivable from non-residents.
20.17 Primary incomes generated by the domestic production of resident units are distributed mostly to other residents; however, part of them may go to non-resident units. Likewise, some primary incomes generated in the rest of the world may be distributed to resident units. Real gross national income (GNI) accounts for these flows. Real GNI is equal to real GDI less deflated primary incomes payable to non-resident units, plus deflated primary incomes receivable from non-resident units. The implicit price deflator for GNE is used to deflate the primary incomes. In contrast to volume GDP, real GNI is not a concept of value added, but a concept of income.
20.18 By removing the volume measure of consumption of fixed capital from real GNI, real net national income is obtained.
Real net national disposable income
20.19 Primary incomes receivable by resident units may be used to make transfers to non-resident units. Likewise, resident units may receive transfers originating out of primary incomes in the rest of the world. Real gross national disposable income is equal to real GNI less deflated current transfers (other than taxes less subsidies on production and imports) payable to non-resident units, plus the corresponding deflated transfers receivable by resident units from the rest of the world. Again, the implicit price deflator for GNE is used. Real gross national disposable income measures the real income available to the total economy for final consumption and gross saving.
20.20 By removing the volume measure of consumption of fixed capital from real gross national disposable income, real net national disposable income (NNDI) is obtained. National disposable income is the sum of the disposable income of all resident institutional units.
Real net national disposable income per capita
20.21 Real NNDI per capita is calculated by dividing real NNDI by the estimated population as published in National, state and territory population and ABS projections.
Endnotes
Unit labour costs
Introduction
20.22 The ABS produces a range of statistics relating to employee remuneration and the price of labour. These statistics have been developed to provide information on the returns to labour from economic production, the level of employee earnings, and labour costs and prices. Relevant series include compensation of employees from the ASNA, average weekly earnings, and the wage price index. Unit labour costs (ULC) are an indicator of the average cost of labour per unit of output produced in the economy. They provide a link between productivity and the cost of labour.
20.23 ULC are a measure of the costs associated with the employment of labour, adjusted for labour productivity. As a result, there will be no change in ULC if there is an increase in average labour costs and a commensurate increase in labour productivity. Unlike ULC, any increase in labour costs associated with increased productivity would be reflected in an increase in the wage price index, average compensation of employees, and average weekly earnings.
20.24 ULC are defined as:
\(\large ULC={Average \ labour \ costs \ (ALC)\over Average \ labour \ productivity \ (ALP)}\hspace{2cm}(1)\)
20.25 Average labour costs (ALC) are calculated as compensation of employees plus payroll tax minus employment subsidies, divided by total hours worked by employees. Training and recruitment costs are excluded due to measurement difficulties.
20.26 Average labour productivity (ALP) is defined here as volume GDP divided by total hours worked. Total hours worked here includes hours worked by employees, employers, and the self-employed, as it is not possible to decompose real GDP into an 'employee only' component. As labour productivity includes employees, employers, and the self-employed, it measures average productivity in both the incorporated and unincorporated sectors.
20.27 Labour productivity growth reflects growth in two areas. The first is from an increasing capital-labour ratio (capital deepening), indicating more capital per unit of labour input. The second is from increasing multifactor productivity, which can occur through the introduction of new disembodied technologies, organisational improvements, economies of scale, or the implementation of research and development. ULC will decrease as capital deepening and multifactor productivity increase (if average labour costs remain constant).
20.28 The ALC and the ALP expressions are:
\(\large ALC={Labour \ costs \ (LC)\over Hours \ worked \ by \ employees}\hspace{2cm}(2)\)
\(\large ALP={Volume \ GDP\over Total \ hours \ worked \ by \ employees \ and \ self \ employed}\hspace{2cm}(3)\)
20.29 An apparent issue in the ULC formula is that the scope of the denominator (average labour productivity), which includes the self-employed, is broader than the scope of the numerator (average labour costs). The implicit assumption is that average labour costs are the same for the self-employed and for employees (shown in equation 4). Total hours worked by employees and the self-employed can be shifted to the numerator in the ULC equation, using equations 1 and 3. As shown in equation 4, this effectively scales up employee labour costs (LC) to the whole economy, and the scope of the numerator and denominator are now the same. Scaling up labour costs in this way depends on the assumption that average hourly labour costs are the same for the self-employed and employees.
\(\large ULC={Labour \ costs(LC) \ \times ({Total \ hours \ worked\over Hours \ worked \ by \ employees })\over Volume \ GDP}\hspace{2cm}(4)\)
20.30 Calculating ULC in this way means that technically, it is an indicator of labour costs for all employed people, not just employees. However, since this involves the assumption that labour costs are the same for employees and the self-employed, ULC have greater explanatory power for the costs of employing employees than employing the self-employed.
20.31 The ASNA publishes the following:
- nominal unit labour costs
- nominal unit labour costs – non-farm
- real unit labour costs
- real unit labour costs – non-farm.
Real unit labour costs
20.32 Nominal ULC are affected by general increases in prices across the economy as the numerator uses nominal labour costs. Real unit labour costs (RULC) eliminate this issue by deflating ALC with the GDP deflator. RULC are an indicator of the direct labour cost pressures associated with the employment of labour, and exclude general price impacts. RULC are calculated as:
\(\large RULC = {(ALC/GDP \ deflator) \over ALP}\hspace{2cm}(5)\)
20.33 Substituting equation 3 into 5, the GDP deflator cancels out and the expression reduces to:
\(\large RULC = {LC\ \times ({Total \ hours \ worked \over Hours \ worked \ by \ employees}) \over {Current \ price \ GDP }} \hspace{2cm}(6)\)
20.34 The labour income share of total factor income (LIS) is defined as labour income (compensation of employees) divided by total factor income. Equation 6 shows that RULC are similar, but not identical to LIS. This is because the denominator for RULC, GDP, is slightly larger than the denominator for LIS, total factor income. If RULC is equated to the LIS, then RULC can be placed within a broader theoretical framework defining the link between wages and productivity.
20.35 The quarterly calculations for RULC are:
Step 1: Derive hours worked by employees (see paragraph 19.79 for more information on calculations of hours worked).
\( { Hours \ worked \ by \ employees }= Total \ hours \ worked \times\left(\frac{{ Employees }}{ { Total \ employed }}\right) \)
Step 2: Calculate GDP per hour
\(GDP \ per \ hour=\frac{Volume \ GDP}{{ Total \ hours \ worked }}\)
Step 3: Calculate labour cost per hour
\( { Labour \ cost \ per \ hour }=\frac{ { Labour \ costs }}{{ Hours \ worked \ by \ employees }} \)
Step 4: Calculate nominal ULC
\(Nominal \ unit \ labour \ cost =\frac{{ Labour \ costs \ per \ hour }}{{ GDP \ per \ hour }}\)
Step 5: Calculate RULC by deflating nominal ULC with the GDP deflator
Step 6: Index the RULC series to the reference year
Step 7: Derive annual RULC from the quarterly series by averaging the level over the four quarters in each year
Real unit labour costs - non-farm
20.36 Due to the highly seasonal and variable nature of the agricultural industry, it can be useful to remove the farm economy from RULC. The quarterly calculations for non-farm RULC are:
Step 1: Derive hours worked by non-farm employees
\({ Hours \ worked \ by \ non \ farm \ employees }={ Total \ non \ farm \ hours \ worked } \times\left(\frac{{ Employees }-{ farm \ employees }}{{ Total\ employed }-{ farm \ employed }}\right)\)
Step 2: Calculate non-farm GDP per hour
\(Non \ farm \ GDP \ per \ hour =\frac{ Non \ farm \ volume \ GDP}{{ Total \ non \ farm \ hours \ worked }} \)
Step 3: Calculate non-farm labour cost per hour
\({ Non \ farm \ labour \ cost \ per \ hour }=\frac{{ Non \ farm \ labour \ costs }}{{ Hours \ worked \ by \ non \ farm \ employees }} \)
Step 4: Calculate nominal non-farm ULC
\({ Nominal \ non \ farm \ ULC }=\frac{{ Non \ farm \ labour \ cost \ per \ hour }}{{ Non \ farm \ GDP \ per \ hour }} \)
Step 5: Calculate non-farm RULC by deflating nominal non-farm ULC with the non- farm GDP deflator
Step 6: Index the non-farm RULC series to the reference year
Step 7: Derive annual non-farm RULC from the quarterly series by averaging the level over the four quarters in each year
ULC measurement issues
Price deflator
20.37 The GDP deflator is used to calculate RULC because its scope covers the production of goods and services in the domestic economy. Alternative measures such as the domestic final demand (DFD) deflator and the household final consumption expenditure (HFCE) deflator provide a demand side view of price change, which is less relevant here. The GDP deflator is affected by trade prices, however, and this is discussed further below. Choosing an appropriate deflator does not need to be considered when calculating nominal ULC, as labour costs are not deflated.
Terms of trade effect
20.38 The GDP deflator will be affected by changes in the terms of trade and for example all else equal will increase as the terms of trade increases. Use of the GDP deflator will therefore capture trading gain / loss as well as changes in productivity and domestic labour prices in RULC.
20.39 At an aggregate level, a sustained shift in the terms of trade will impact the capacity of the economy to pay higher wages. However, if the interest is in the link between labour productivity and labour costs, then including the terms of trade effect would be inappropriate.
Treatment of self-employed
20.40 ULC include an estimate for the cost of self-employed labour by assuming that the self-employed earn, on average, the same amount per hour as employees. Ideally, a return to labour from gross mixed income, which measures returns to unincorporated businesses (including the self-employed), would be used. Calculating this, however, requires too many assumptions for ULC compilation purposes.
20.41 More critically, if the purpose of ULC is to examine the costs of employees – that is, an employers' willingness to employ – then the self-employed should be excluded. However, while labour costs are already measured for employees only (and scaled up to include the self-employed), it is not possible to define volume GVA excluding the self-employed.
Analytical measures of income, consumption, saving and wealth
20.42 Saving, investment, borrowing and lending, change in net worth, and net worth for the nation and the institutional sectors are all linked by a series of accounting identities in the SNA. The ASNA presents these estimates in a way that highlights the links between the traditional income flows and the change in net worth as reflected in the balance sheet. The calculation and presentation of these estimates provide additional insights into changes in income, saving, and wealth in Australia.
20.43 The concept of disposable income used in the ASNA is directly linked to production. Disposable income can be generated either directly, by participating in production, or indirectly, through the redistributive process (taxation, transfers such as social assistance benefits, and income flows with the rest of the world, for example). Holding gains and losses are excluded from income in the national accounts, as they result from price change, not from production. For some purposes it may be preferable to use a broader definition of income. The broader definition of income which has gained importance in economics is that of J. R. Hicks, expressed in the 2008 SNA:
income is often defined as the maximum amount that a household, or other unit, can consume without reducing its real net worth.¹⁰⁶
20.44 This wider definition brings the balance sheet into the measurement of income and saving, to take account of changes in the volume and value of capital during the accounting period. These include the depletion and discovery of natural resources, unforeseen losses due to natural disasters, and asset revaluations due to price changes.
20.45 However, there is an important debate in the international national accounts community over the validity of treating real holding gains in the same manner as gross disposable income. The impact of real holding gains on economic activity may not be equivalent to income received in cash or in kind. If a real holding gain accrues due to an increase in the price of a particular asset, many agents may wish to realise this gain. If they attempt to cash out at the same time, the price of the asset may fall and the size of the realised gain may be smaller than the imputed real holding gain. In addition, the realisation of a holding gain may lead to the payment of tax, which would reduce the amount of funds available to the asset holder. Thus, the measures introduced here should not be seen as replacing or correcting the traditional income and saving measures in the national accounts; rather they are provided to give users an alternative view of the available information.
20.46 The following analytical measures for income, saving, and wealth are presented at a national and household sector level in the ASNA.
Gross disposable income (GDI) plus other changes in real net wealth
20.47 This item is compiled using data from the income, capital, financial, other changes in assets, and revaluation accounts:
\(\small {GDI \ plus \ changes \ in \ real \ net \ wealth=Gross \ disposable \ income\\ + Real \ holding \ gains \ and \ losses \\ + Net \ capital \ transfers \\ + Other \ changes \ in \ volume}\)
where
\(\small {Real \ holding \ gains \ and \ losses=Real \ holding \ gains \ and \ losses \ on\ non-financial \ produced \ assets \\ + Real \ holding \ gains \ and \ losses \ on \ non-financial \ produced \ asset \ (land)\\+ Real \ holding \ gains \ and \ losses \ on \ non-financial \ produced \ assets\ (other) \\ + Real \ holding \ gains \ and \ losses \ on \ financial \ assets \\ - Real \ holding \ gains \ and \ losses \ on \ liabilities }\)
Net saving plus other changes in real net wealth
20.48 This item can be derived using flow data as follows:
\(\small {Net \ saving \ plus \ changes \ in \ real \ net \ wealth = GDI \ plus \ changes \ in \ real \ net\ wealth\\ - Final \ consumption \ expenditure\\ - Consumption \ of \ fixed \ capital}\)
20.49 This item can be equivalently derived from a balance sheet perspective as follows:
\(\small {Net \ saving \ plus \ changes \ in \ real \ net \ wealth= Closing \ net \ worth\\ - Opening \ net \ worth \\ - Neutral \ holding \ gains \\ - Net \ errors \ and \ omissions \\ + Statistical \ discrepancy \\ - Other \ differences}\)
20.50 Other differences arise due to a different treatment of stock and flow concepts between the balance sheet and capital account estimates. Net capital formation in the balance sheet includes plantation standing timber inventories. These are included in the change in net worth in the balance sheet but are excluded from the capital account.
Alternate measure of household final consumption expenditure
20.51 The analytical measures table for the household sector contains memorandum items for final consumption expenditure on consumer durables, and the value of the services provided by the current stock of durables. Unlike other final goods and services, which are used up in the same accounting period in which they are purchased, consumer durables (such as cars, refrigerators and computers) provide a flow of services to their owners over several accounting periods. For some purposes, it may be useful to consider the flow of services provided by consumer durables during the accounting period as final consumption expenditure, rather than purchases of consumer durables.
20.52 For more information on the treatment of consumer durables and the services that flow from them, refer to chapter 17.
Farm and non-farm GDP
20.53 The farm economy is one of the more volatile components of the Australian economy. One of the key reasons is that the farm economy is more exposed to fluctuations in weather conditions compared with other industries. Derivation of non-farm GDP removes farm-related volatility from output growth.
20.54 The farm economy is defined in the ASNA as ANZSIC Division A, Subdivision 01 Agriculture. It follows that non-farm production arises from all other industries.
20.55 Measures calculated include:
- farm and non-farm GDP – current prices
- farm and non-farm GDP – chain volumes
- farm and non-farm GDP – implicit price deflators.
Farm and non-farm GDP - current prices
20.56 Farm GDP in current prices is defined as:
\(\small {Farm \ GDP \ = gross \ value \ of \ farm \ output\\- intermediate \ input \ costs \\ + taxes \ on \ products \ allocated \ to \ farm \\- subsidies \ on \ products \ allocated \ to farm}\)
20.57 For details on the calculation of gross value of farm output and intermediate input costs in current prices, see tables 9.1 and 9.34.
20.58 Using the value added approach, GDP by industry cannot be calculated as it is not possible to allocate taxes and subsidies on products to individual industries. To derive farm GDP, however, an allocation of taxes less subsidies on products is made by assuming all products primary to the Agriculture industry, which attract taxes and subsidies, are allocated to the farm economy.
20.59 Both annual and quarterly non-farm GDP are calculated by subtracting farm GDP in current prices from total GDP in current prices.
Farm and non-farm GDP - chain volumes
20.60 As described in chapter 9, volume estimates of farm gross value added are calculated by aggregating components which have predominantly been quantity revalued in the prices of the previous year. To calculate farm GDP in chain volume measures, this estimate of gross value added is added to taxes less subsidies on products for the Agriculture industry, which has been similarly revalued, and the series is chained.
20.61 Non-farm GDP in chain volume terms is calculated by chaining the difference between total GDP and farm GDP.
20.62 It is important to recognise that the derivation of farm GDP (and non-farm GDP) depends on an industry allocation of net taxes on products which is not conceptually valid according to the 2008 SNA. Users should be aware of this when using these aggregates for analytical purposes.
Farm and non-farm GDP - implicit price deflators
20.63 Both annual and quarterly IPDs for farm and non-farm GDP are calculated by dividing the current price estimate by the corresponding chain volume measure.
Endnotes
Income related measures
20.64 The various measures calculated include:
- wages share of total factor income
- profits share of total factor income
- average compensation per employee
- non-farm compensation of employees
- average non-farm compensation per employee.
Wages share of total factor income
20.65 Total factor income (TFI) is the sum of compensation of employees, gross operating surplus and gross mixed income. Wages share of TFI is the percentage of TFI that is made up by compensation of employees (COE).
20.66 Wages share of TFI is calculated as:
\(\large Wages \ share \ of \ total \ factor \ income = \frac{{COE}}{{TFI}} \times 100\)
Profits share of total factor income
20.67 Profits share of TFI is the percentage of TFI that is made up by gross operating surplus (GOS) of financial and non-financial corporations.
20.68 Profits share of TFI is calculated as:
\(\large Profits \ share \ of \ total \ factor \ income = \frac{{GOS}}{{TFI}} \times 100\)
Average compensation per employee
20.69 Average COE is a key analytical indicator of the returns to labour from production. It is calculated as:
\(\large Average \ COE = \frac{{Total \ COE}}{{Total \ employees}}\)
20.70 For national accounting purposes, COE excludes unpaid and self-employed workers. Therefore, the national accounts employment measure also excludes self-employed, volunteer, and family workers and is the average of three months’ estimates. It may differ from other employment estimates published by the ABS.
20.71 An employee is defined as someone who works for cash or payment in kind and has a formal agreement with their employer.
20.72 Total employees include:
- Civilian – an average of three months’ employee estimates; sourced from the Labour Force Survey as a special dataset
- Defence – permanent forces split by Navy, Air Force and Army; sourced from the Department of Defence
- Farm – employee estimates from ANZSIC Division A, Subdivision 01 Agriculture; sourced from the Labour Force Survey.
Non-farm compensation of employees
20.73 Due to the highly seasonal and variable nature of the agricultural industry, it can be useful to remove farm COE from total COE. Non-farm COE is calculated as:
\(\large Non \ farm \ COE \ = \ total \ COE \ - farm \ COE\)
where farm COE is equal to the COE for ANZSIC Subdivision 01 and is sourced from estimates of income by industry.
Average non-farm compensation per employee
20.74 Average non-farm COE is calculated as:
\(\large Average \ non \ farm \ COE = \frac{{Non \ farm \ COE}}{{Non \ farm \ employees}}\)
where non-farm employees equals civilian employees plus Defence employees
Gross entrepreneurial income
20.75 Gross entrepreneurial income (GEI) is the national accounting equivalent of the concept of profit and loss as understood in commercial accounting. It is calculated as a balancing item and is a close approximation of before tax profits.
20.76 GEI for a corporation, quasi-corporation, or an institutional unit owning an unincorporated enterprise engaged in market production, is defined as its gross operating surplus (or gross mixed income), plus property income receivable on the assets owned by the enterprise, less interest payable on the liabilities of the enterprise and rent payable on land or other tangible non-produced assets rented by the enterprise.
20.77 GEI for non-financial corporations is calculated by summing gross operating surplus and total property income receivable, then subtracting interest payable and rent on natural assets payable.
20.78 GEI for financial corporations is calculated by summing gross operating surplus and total property income receivable, then subtracting interest payable, rent on natural assets payable, and property income attributable to insurance policyholders.
20.79 GEI for households is derived by summing gross operating surplus from dwellings, gross mixed income and total property income receivable, then subtracting interest payable and rent on natural assets payable.
Analytical expenditure aggregates
Analytical aggregates of household consumption
20.80 The following analytical splits of household final consumption expenditure (HFCE) are produced:
- Goods and services consumption
- Essential and discretionary consumption
20.81 Table 20.1 shows how the components of HFCE are allocated to each of the above categories. This classification aligns with the broad outlays defined by the Classification of Individual Consumption by Purpose (see chapter 10), and with the concepts of essential and discretionary consumption used by the Reserve Bank of Australia.
| HFCE component | Goods or services | Essential or discretionary | Durable or non-durable goods | |
|---|---|---|---|---|
| Food | Goods | Essential | Non-durable | |
| Cigarettes and tobacco | Goods | Discretionary | Non-durable | |
| Alcoholic beverages | Goods | Discretionary | Non-durable | |
| Clothing & footwear | Goods | Discretionary | Durable | |
| Rent & other dwelling services | Services | Essential | ||
| Electricity, gas & other fuel | Goods | Essential | Non-durable | |
| Furnishings & household equipment | Goods | Discretionary | Durable | |
| Health | ||||
| Chemist goods | Goods | Essential | Non-durable | |
| Doctors & other medical services | Services | Essential | ||
| Dentists | Services | Essential | ||
| Hospital services | Services | Essential | ||
| Purchase of vehicles | Goods | Discretionary | Durable | |
| Operation of vehicles | ||||
| Fuel | Goods | Essential | Non-durable | |
| Goods excluding fuel | Goods | Essential | Non-durable | |
| Repairs & servicing | Services | Essential | ||
| Transport services | ||||
| Rail | Services | Essential | ||
| Bus | Services | Essential | ||
| Taxis | Services | Essential | ||
| Air | Services | Discretionary | ||
| Water | Services | Discretionary | ||
| Communications | Services | Essential | ||
| Recreation & culture | ||||
| Goods for recreation & culture | Goods | Discretionary | Durable | |
| Recreational & cultural services | Services | Discretionary | ||
| Education services | Services | Essential | ||
| Hotels, cafes & restaurants | Services | Discretionary | ||
| Insurance & other financial services | Services | Essential | ||
| Other goods & services | ||||
| Personal care | Services | Discretionary | ||
| Personal effects | Goods | Discretionary | Durable | |
| Other services | Services | Discretionary | ||
20.82 The analytical aggregates of HFCE are published quarterly in current prices and chain volume measures.
New private business investment
20.83 New private business investment is the sum of gross fixed capital formation (GFCF) of new non-dwelling construction, new machinery and equipment, cultivated biological resources, and intellectual property products. It does not include second-hand asset sales between the public sector and private corporations, which are included in private business investment.
20.84 New private business investment is published in current prices and chain volumes in the ASNA.
Mining and non-mining private business investment
20.85 Mining private business investment measures GFCF by the Mining industry (ANZSIC Division B). It is made up of three subcomponents: GFCF of non-dwelling construction, machinery and equipment, and intellectual property products. On a quarterly basis, estimates for mining investment are compiled by interpolating and extrapolating annual estimates using the following indicators:
- Non-dwelling construction: detailed ‘type of construction’ estimates from the Engineering Construction Survey
- Machinery and equipment: estimates of capital expenditure by the Mining industry on equipment, plant and machinery, from Private New Capital Expenditure and Expected Expenditure
- Intellectual property products: a combination of estimates of total private exploration from Mineral and Petroleum Exploration and linear interpolation of annual estimates from the annual national accounts.
20.86 Quarterly non-mining investment is calculated as the residual of total private business investment, less mining investment. In addition to the 3 subcomponents above, it also includes investment in cultivated biological resources. Quarterly and annual estimates of mining and non-mining investment are published in current prices and chain volumes in the ASNA.
Public and private final demand
20.87 Final demand is equal to total final expenditures and, with changes in inventories and exports less imports of goods and services, makes up GDP. Private final demand is then the sum of HFCE and private GFCF, while public final demand is the sum of government final consumption expenditure and GFCF by general government and public corporations.
20.88 Quarterly and annual estimates of public and private final demand are published in current prices and chain volumes in the ASNA.
Net trade contribution to growth in GDP
20.89 Net trade is the impact of imports and exports on GDP as calculated under the expenditure approach. It is the value of exports of goods and services less the value of imports of goods and services.
20.90 The contribution of net trade to growth in volume GDP is published quarterly in the ASNA and is calculated using the method outlined in Chapter 6.
Inventories and sales
Private non-farm inventory levels
20.91 The level of private non-farm inventories includes Mining, Manufacturing, Wholesale Trade, Retail Trade, and other non-farm and non-public sector inventories. Closing book values are compiled in current prices and chain volume measures.
20.92 The current price estimate is the cumulative sum of the change in book values captured by the Quarterly Business Indicators Survey (QBIS), augmented by some modelled estimates to cover industries out of scope of QBIS. The closing book value inventory levels produced by QBIS are further adjusted to remain consistent with benchmarks produced by supply-use balancing.
20.93 These series are published on a quarterly basis only.
Sales
20.94 Domestic sales are the sum of:
- HFCE on goods
- private GFCF of dwellings, non-dwelling construction, and machinery and equipment
- public GFCF of dwellings, non-dwelling construction, and machinery and equipment.
20.95 Total sales include exports of goods (total non-rural, total rural, and gold) and are the sum of:
- HFCE on goods
- private GFCF of dwellings, non-dwelling construction, and machinery and equipment
- public GFCF of dwellings, non-dwelling construction, and machinery and equipment
- exports of goods.
20.96 These series are compiled in current prices on a quarterly basis only.
Private non-farm inventories to total sales
20.97 Private non-farm inventories to sales is the ratio of private non-farm inventory closing book values to total sales. It is compiled on a quarterly basis only, and is calculated as:
\(\large Private \ non \ farm \ inventories \ to \ total \ sales = \frac{{Private \ non \ farm \ inventories}}{{Total \ sales}}\)
Imports to domestic sales
20.98 Imports to domestic sales is the ratio of imports of merchandise goods to domestic sales. It is compiled on a quarterly basis only, and is calculated as:
\(\large Imports \ to \ domestic \ sales = \frac{{Imports \ of \ merchandise \ goods}}{{Domestic \ sales}}\)
where imports of merchandise goods is the sum of consumption goods, capital goods, and intermediate and other merchandise goods.