ADDITIONAL COMMENTARY


MANUFACTURING INDUSTRIES PRODUCER PRICE INDEXES

During the December quarter 2009, the prices paid by manufacturers for material inputs decreased by 1.7%, while the prices they received for their outputs decreased by 1.8%.Through the year to December quarter 2009, prices of material inputs decreased by 15.2%, while prices for outputs decreased by 6.8%.

Price decreases for products from basic chemical and chemical product manufacturing (-14.6%) and agriculture (-4.4%) drove the decrease in the cost of materials used in the manufacturing industries. Major contributors to these price decreases were other inorganic chemicals, untreated milk, wheat and spelt, cattle and calves, and sheep and lambs. Price increases for products from metal ore mining (+3.4%) and oil and gas extraction (+1.8%) provided offsets to the price decreases.

The decrease in prices received for produced articles primary to manufacturing industries was mainly due to decreases in the prices of outputs primary to petroleum and coal product manufacturing (-6.0%), basic ferrous metal manufacturing (-7.7%) and fertiliser and pesticide manufacturing (-15.6%). Major contributors to these price decreases were unleaded petrol, steel structural sections and phosphatic fertilisers. These decreases were partially offset by increases in the prices received for outputs primary to basic non-ferrous metal manufacturing (5.3%) and sugar and confectionary manufacturing (3.1%).

CONSTRUCTION INDUSTRIES PRODUCER PRICE INDEXES

The price index for materials used in house building increased by 0.1% in the December quarter 2009. This follows a decrease of 0.8% in the September quarter 2009, increases of 0.4% in the June quarter 2009 and 1.3% in March quarter 2009. The most significant increases this quarter were price rises for plumbing products (+2.0%), cement products (+1.0%), timber, board and joinery (+0.5%) and ceramic products (+0.1%). These increases were partially offset by decreases for steel products (-2.0%), other metal products (-0.6%), electrical equipment (-0.4%), installed gas and electrical appliance (--0.3%) and other materials (-0.3%).

Sydney (+1.1%) and Brisbane (+1.1%) contributed the most to the overall weighted average of 6 capital cities quarterly movement. These increases were partially offset by a decrease in Melbourne (-1.0%), Hobart (-0.6%) and Perth (-0.4%). Adelaide was the only city that showed no change this quarter.

Through the year to December Quarter 2009 the materials used in house building price index rose by 1.0%. This rise was mainly attributed to increases of prices paid for electrical equipment (+5.5%), cement products (+5.0%), ceramic products (+3.5%), other metal products (+3.0%) and plumbing products (+2.8%). These increases were partially offset by a decrease in prices paid for steel products (-14.9%), and concrete, cement and sand (-1.1%).

The main movements in the price indexes for selected outputs primary to Division E - Construction for the December quarter 2009 were increases in Subdivision 30 - Building construction (+0.3%), which was mainly driven by an increase in Class 3011 - House construction (+0.5%). The increase in building construction was mainly influenced by increases in NSW (+0.5%) and Victoria (+0.5%).

The price index for outputs primary to Class 3101 - Road and bridge construction increased by 0.8% in the December 2009 quarter which was driven by increases in Victoria (+1.7%) and NSW (+0.6%).

SERVICE INDUSTRIES PRODUCER PRICE INDEXES

SELECTED OUTPUT OF DIVISION I - TRANSPORT, POSTAL AND WAREHOUSING

The price indexes of selected output of services primary to Division I - Transport, postal and warehousing recorded increases for the December quarter 2009 in Group 521 - Water transport support services (+7.5%), driven by price increases for grain loader and container, Group 471- Rail freight transport (+7.5%), driven by price increases for bulk freight, Group 530 - Warehousing and storage services (+3.2%), driven by price increases for wheat and non-wheat grain, Group 461- Road freight transport (+0.5%), driven by price increases for express freight.

This Division recorded a decrease for Group 481- Water freight transport (-6.6%), driven by decreased prices for international sea freight.


SELECTED OUTPUT OF DIVISION J - INFORMATION MEDIA AND TELECOMMUNICATIONS

The price indexes for selected output of services primary to Division J - Information media and telecommunication services recorded a decrease for the December quarter 2009 in Group 541- Newspaper, periodical, book and directory publishing (-1.8%), driven by prices decreases for newspaper printing and newspaper advertising and Group 592 - Data processing, web hosting and electronic information storage services (-1.4%), driven by price decreases for information storage and retrieval.


SELECTED OUTPUT OF DIVISION L - RENTAL, HIRING AND REAL ESTATE SERVICES

The price indexes of selected output of services primary to Division L - Rental, hiring and real estate services recorded increases for the December quarter 2009 in Sub-division 66 - Rental and hiring services (except real estate) (+0.4%), driven by price increases for Group 663 - Other goods and equipment hire (+0.9%) and Group 672 - Real estate services (+2.0%).

This Division recorded a decrease for Class 6712 - Non-residential property operators (-0.8%).


SELECTED OUTPUT OF DIVISION M - PROFESSIONAL, SCIENTIFIC AND TECHNICAL SERVICES

The price indexes of selected output of services primary to Division M - Professional, scientific and technical services recorded increases for the December quarter 2009 in Group 700 - Computer system design and related services (+0.9%), driven by price increases for computer consultancy, Group 693 - Legal and accounting services (+0.6%), driven by price increases for accounting services and Group 692 - Architectural, engineering and technical services (+0.4%), driven by price increases for surveying and mapping services and architectural services.


SELECTED OUTPUT OF DIVISION N - ADMINISTRATIVE AND SUPPORT SERVICES

The price indexes of selected output of services primary to Division N - Administrative and support services recorded increases for the December quarter 2009 in Group 721 - Employment services (+1.1%), driven by price increases for contract staff services and Group 729 - Other

administrative services (+0.4%), driven by price increases for exhibitions and conferences and secretarial services.


SELECTED OUTPUT OF DIVISION O - PUBLIC ADMINISTRATION AND SAFETY

The price index for selected output of services primary to Division O - Public administration and safety recorded an increase for the December quarter 2009 Class - 7712 Investigation and security services (+1.5%), driven by price increases for security guards.


SELECTED OUTPUT OF DIVISION S - OTHER SERVICES

The price index for selected output of services primary to Division S - Other services recorded an increase for the December quarter 2009 in Class 9533 - Parking services (+1.7%).