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SEPTEMBER QUARTER KEY FIGURES

		Jun Qtr 2005	Sep Qtr 2005	Jun Qtr 2005 to Sep Qtr 2005
		$m	$m	% change
TREND ESTIMATES
Balance on current account		-13 046	-12 646	3
Balance on goods and services		-4 582	-4 071	11
Net income		-8 344	-8 442	-1
SEASONALLY ADJUSTED
Balance on current account		-12 016	-13 530	-13
Balance on goods and services		-4 272	-4 342	-2
Net income		-7 667	-9 026	-18
ORIGINAL
Balance on current account		-11 542	-15 207	-32
Balance on capital and financial account		11 212	14 862	33
Levels at end of period
Net international investment position (IIP)		527 035	538 986	2
	Net equity	89 997	89 289	-1
	Net debt	437 038	449 696	3

Current Account, Main aggregates - Trend estimates at current prices

International Investment, Levels at end of period

SEPTEMBER QUARTER KEY POINTS


BALANCE OF PAYMENTS

• The current account deficit, seasonally adjusted, rose $1,514m (13%) to $13,530m. The deficit on the balance of goods and services rose $70m (2%) to $4,342m. The income deficit rose $1,359m (18%) to $9,026m.
• In seasonally adjusted chain volume terms there was an increase of $665m (6%) in the deficit on goods and services. This could be expected to contribute -0.3 percentage points to growth in the September quarter 2005 volume measures of GDP.

• Australia's net IIP rose $12b to a net liability of $539b at 30 September 2005. Transactions of $15b mostly contributed to this increase. Partially offsetting the increase were price changes of -$3b. Net foreign debt liabilities rose $13b to $450b, while foreign net equities fell by $1b to $89b.

Incorporation of new methodologies and data sources for travel services credits and debits along with the latest survey and administrative data has resulted in revisions to the current account back to September quarter 1971, increasing the 2004-05 current account deficit by $346m. A feature article, Changes to International Trade in Services Travel Statistics, detailing the changes to travel services credits and debits, was released on the ABS website on 4 October 2005. To access this article select: Themes then International Trade then Topics of Interest. The financial account and international investment position have been revised back to September quarter 2004 increasing Australia's net IIP liability as at 30 June 2005 by $10.2b.

FEATURE ARTICLE

An article on Foreign Ownership of Equity which will update the analysis last published in the September quarter 2004 issue, will be released in early 2006. The timing of the release will be advised in the November 2005 issue of International Trade in Goods and Services, Australia (cat. no. 5368.0) which will be relesed on 10 January 2006.

CHANGES IN THIS ISSUE

Seasonally Adjusted and Trend Estimates

The seasonally adjusted and trend estimates of the current account have been revised as a result of the annual seasonal reanalysis, which reviews the seasonal and trading day factors in more detail than is possible in the quarterly cycle and re-estimates and assesses the appropriateness of any prior corrections which have previously been applied. As a result of the reanalysis, two goods debits series, fuels and lubricants and goods procured in ports by carriers, have been identified as no longer being seasonal in nature. In previous issues users were advised that it was difficult to reliably estimate seasonal patterns in these two series.

As a result of the enhancements introduced to the seasonal adjustment process for income in the June quarter 2005 issue, seasonally adjusted and trend estimates are now presented at a finer level. Table 22 contains seasonally adjusted and trend income estimates for compensation of employees, direct investment equity, direct investment debt, portfolio investment equity, portfolio investment debt and other investment.

Table Changes

The inclusion of the new Table 22, has resulted in the existing tables numbered 22 through to 38 in this publication and in the electronic release of this publication being re-numbered as Tables 23 through to 39. This numbering will also be reflected in the AusStats tables. In addition, AusStats tables 72 to 88 have been incremented by one to maintain the numbering relationship between quarterly and financial year series.

Selected International Accounts Ratios - Table 35

Ratios of current account and international investment measures to both annual and annualised ( i.e. four quarter moving average ending on the reference quarter) GDP are presented in Table 35. The updated annual GDP benchmarks released on 7 November 2005 in the Australian System of National Accounts (cat. no. 5204.0) have been used in the annual ratios and are presented in this issue. These benchmarks will be incorporated into the quarterly national accounts with the September quarter 2005 issue of Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0) to be released on 7 December 2005. The introduction of the benchmarks will change the level of the quarterly GDP used in the annualised ratios. Therefore, annualised ratios using the latest available quarterly GDP would be inconsistent with the annual ratios and have been suppressed in this issue. The annualised ratios will be presented in the Analysis and Comments section of the September quarter 2005 issue of Australian National Accounts: National Income, Expenditure and Product and Table 35 of this publication will be replaced on AusStats in conjunction with the release of the quarterly national accounts.

INQUIRIES

For further information contact Tom Jebbink on Canberra (02) 6252 5540 for balance of payments estimates, and Sawbhag Naidu on Canberra (02) 6252 5541 for international investment estimates.

TABLES ON AUSSTATS


TABLES AVAILABLE ON AUSSTATS

Data available on the ABS web site <www.abs.gov.au> include:

• longer time series of all tables contained in this publication
• additional tables as listed below:

52 International investment position by net foreign equity and net foreign debt - Financial year

53 International investment position by foreign assets by equity and debt - Financial year

54 International investment position by foreign liabilities by equity and debt - Financial year

56 Goods and services: terms of trade, original - Financial year

57 Goods credits: original - Financial year

58 Goods debits: original - Financial year

63 Goods credits: implicit price deflators (Index numbers) - Financial year

64 Goods debits: implicit price deflators (Index numbers) - Financial year

65 Services credits: original - Financial year

66 Services debits: original - Financial year

68 Services credits: chain volume measures and implicit price deflators (Index numbers) - Financial year

69 Services debits: chain volume measures and implicit price deflators (Index numbers) - Financial year

70 Income credits: original - Financial year

71 Income debits: original - Financial year

73 Current transfers: original - Financial year

74 Capital account - Financial year

75 Financial Account - Financial year

76 International investment: Australian investment abroad - Financial year

77 International investment: foreign investment in Australia - Financial year

78 International investment: levels of Australian investment abroad - Financial year

79 International investment: levels of foreign investment in Australia - Financial year

80 International investment: foreign debt levels at the end of period - Financial year

81 International investment: gross external debt liabilities - Financial year

83 Balance of payments: exchange rates - Financial year

84 International investment: foreign assets and liabilities - Financial year

85 Balance of payments: ratios of current account measures to GDP - Financial year

89 International investment position: historical summary - Financial year

95 Quarterly combined current price seasonal adjustment factors, September 1959 to June 2006

101 Merchandise exports by SITC division on a Balance of payments basis, chain volume measures

102 Merchandise exports by SITC division on a Balance of payments basis, implicit price deflators

103 Merchandise exports by SITC division and section on a Recorded trade basis, chain volume measures

104 Merchandise exports by SITC division and section on a Recorded trade basis, implicit price deflators

105 Merchandise imports by End-Use categories on a Balance of payments basis, chain volume measures

106 Merchandise imports by End-Use categories on a Balance of payments basis, implicit price deflators

107 Merchandise imports by SITC division and section on a Recorded trade basis, chain volume measures

108 Merchandise imports by SITC division and section on a Recorded trade basis, implicit price deflators

109 Services credits and debits, confidentialised version, chain volume measures

110 Services credits and debits, confidentialised version, implicit price deflators

111 Balance of payments: current account transactions, seasonally adjusted and trend estimates (percentage change) - Quarter

112 Balance of payments: goods and services, implicit price deflators, original (index) - Quarter

113 Balance of payments: original and seasonally adjusted chain volume measures and indexes (percentage change) - Quarter

114 Balance of payments: goods credits, chain volume measures, original - Quarter

115 Balance of payments: goods debits, chain volume measures, original - Quarter

116 Balance of payments: services credits and debits, current prices, original and seasonally adjusted - Quarter

117 International investment: foreign assets, by direction and type of investment - Quarter

118 International investment: foreign liabilities, by direction and type of investment - Quarter

119 International investment: foreign debt transactions - Quarter

120 International investment: interest income on foreign debt - Quarter

214 Balance of payments: goods credits, chain volume measures, original - Financial year

215 Balance of payments: goods debits, chain volume measures, original - Financial year

216 Balance of payments: services credits and debits, current prices, original and seasonally adjusted - Financial year

217 International investment: foreign assets, by direction and type of investment - Financial year

218 International investment: foreign liabilities, by direction and type of investment - Financial year

219 International investment: foreign debt transactions - Financial year

220 International investment: interest income on foreign debt - Financial year

ANALYSIS AND COMMENTS


BALANCE OF PAYMENTS


CURRENT ACCOUNT

The trend estimate of the balance on current account for the September quarter 2005 was a deficit of $12,646m, a decrease of $400m (3%) on the revised deficit recorded for the June quarter 2005. The main contributor to the decrease in the deficit was goods credits which rose $1,088m (3%) partly offset by goods debits which rose $645m (2%).

In seasonally adjusted terms, the current account deficit rose $1,514m (13%) to $13,530m between the June and September quarters 2005 where:

• the net income deficit rose $1,359m (18%) to $9,026m
• the net goods deficit rose $220m (6%) to $4,070m
• the net services deficit fell $150m (36%) to $272m.

In seasonally adjusted terms, the balance on goods and services was a deficit of $4,342m, an increase of $70m (2%) on the June quarter 2005 deficit where:

• the goods deficit rose $220m (6%) to $4,070m
• the services deficit fell $150m (36%) to $272m.

The movements within goods credits were:

• non-rural goods, up $115m
• other goods, down $64m (3%)
• rural goods, down $23m.

• other goods, up $207m (16%)
• consumption goods, up $186m (2%)
• intermediate and other merchandise goods, up $134m (1%)
• capital goods, down $279m (3%).

The increase of $665m in the deficit on goods and services in volume terms could be expected to make a contribution to growth of -0.3 percentage points in the September quarter 2005 volume measures of GDP, assuming no significant revision to the GDP chain volume estimate for the June quarter 2005.

Goods and Services(a)

Seasonally adjusted, goods credits were $35,357m, up $28m on the June quarter 2005.

Rural goods (seasonally adjusted, current prices) fell $23m to $6,215m, mainly due to decreased volumes. Decreases were in:

• wool and sheepskins, down $121m (16%), with volumes down 16% and prices up 1%
• meat and meat preparations, down $109m (6%), with volumes down 5% and prices down 1%.

• cereal grains and cereal preparations, up $121m (13%), with volumes up 20% and prices down 6%
• other rural, up $86m (3%), on increased prices.

• coal, coke and briquettes, up $315m (6%), with volumes down 4% and prices up 10%
• machinery, up $45m (2%), on increased prices
• metal ores and minerals, up $22m, with volumes down 2% and prices up 3%.

• other non-rural, down $125m (4%), with volumes down 6% and prices up 2%
• transport equipment, down $95m (6%), with volumes down 7% and prices up 1%.

General Merchandise Credits(a)

In seasonally adjusted current price terms, goods debits rose $248m (1%) to $39,427m.

Consumption goods (seasonally adjusted, current prices) rose $186m (2%) to $12,194m, with both volumes and prices up 1%. The largest increases were in:

• consumption goods n.e.s., up $81m (2%), with volumes up 1% and prices up 2%
• toys, books and leisure goods, up $56m (6%), on increased volumes
• household electrical items, up $50m (5%), with volumes up 2% and prices up 3%.

• civil aircraft, down $304m, largely on decreased volumes
• capital goods n.e.s., down $51m (4%), with volumes down 5% and prices up 1%
• ADP equipment, down $44m (3%), with volumes down 1% and prices down 2%.

• telecommunications equipment, up $86m (8%), with volumes up 10% and prices down 2%
• industrial transport equipment n.e.s., up $68m (5%), with volumes up 4% and prices up 2%.

• processed industrial supplies, up $133m (4%), on increased volumes
• fuels and lubricants, up $70m (2%), with volumes down 14% and prices up 18%
• organic and inorganic chemicals, up $65m (7%), with volumes up 10% and prices down 3%
• other parts for capital goods, up $44m (2%), on increased volumes.

• other merchandise goods, down $100m (31%), on decreased volumes
• parts for transport equipment, down $85m (5%), with volumes down 6% and prices up 1%.

General Merchandise Debits(a)

In seasonally adjusted terms, net services recorded a deficit of $272m, a fall of $150m (36%) on the June quarter 2005.

Services credits, in seasonally adjusted terms at current prices, rose $160m (2%) to $9,375m, largely on increased prices. The largest increases in services credits were in:

• travel services, up $158m (3%), with both volumes and prices up 2%
• passenger and other transportation services, up $30m (2%), on increased prices.

Services debits, in seasonally adjusted terms at current prices, rose $10m to $9,647m. This was mainly due to travel services, up $56m (1%), on increased volumes.

This increase was largely offset by:

• other services, down $34m (1%), on decreased volumes
• passenger and other transportation services, down $12m (1%) with volumes down 3% and prices up 2%.

Implicit Price Deflator

In seasonally adjusted terms, the implicit price deflator (IPD) for total goods and services credits rose 2.8%. In original terms, it rose by 3.1%. The chain Laspeyres price index for goods and services credits rose 3.2%, indicating that the compositional effects had a downward influence on the movement in the IPD. The IPD for goods credits rose 3.3% and the IPD for services credits rose 1.4%.

The total goods and services debits IPD rose 1.0% in seasonally adjusted terms. In original terms, it rose by 0.7%. The chain Laspeyres price index for debits rose 1.5%.

IMPLICIT PRICE DEFLATOR(a)

During the September quarter 2005, the goods imports IPD (in original terms) rose 0.9% and the chain Laspeyres price index for goods imports rose 2.0%. The import price index (IPI) rose 2.6%.

Terms of trade

Australia's seasonally adjusted terms of trade rose 1.8% to 118.8, with an increase of 2.8% in the IPD for goods and services credits and a 1.0% increase in the goods and services debits IPD. The trend estimate of the terms of trade increased 2.1% to 118.9.

Income

The trend estimate of the net income deficit rose $98m (1%) to $8,442m.

In seasonally adjusted terms, the net income deficit rose $1,359m (18%) to $9,026m. Income credits fell $303m (5%) to $5,398m and income debits rose $1,056m (8%) to $14,424m.

In original terms, the net income deficit rose $2,139m (28%) to $9,735m. Income credits fell $529m (9%) to $5,233m and income debits rose $1,610m (12%) to $14,968m.

The increase in the net income deficit was driven by increased income debits on direct investment equity as a result of strength in the resource sector. The strength resulted from strong coal and oil prices, increased production, and a slight decline in the AUD against the USD.

Net Income

CAPITAL AND FINANCIAL ACCOUNT

Capital Account

In original terms, the capital account surplus was $359m, up $172m on the June quarter 2005 surplus. Capital transfer credits rose $165m (29%) to $738m, while capital transfer debits fell $18m (5%) to $357m.

Financial Account

In original terms, the balance on financial account recorded a net inflow of $14.5b, with a $16.2b inflow of debt and a $1.7b outflow of equity.

Direct investment in Australia recorded an inflow of $4.6b in the September quarter 2005, a turnaround of $65.0b on the June quarter 2005 outflow of $60.4b. Australia's direct investment abroad recorded an outflow of $6.2b, a turnaround of $74.9b on the previous quarter's inflow of $68.6b.

Portfolio investment recorded a net inflow of $5.0b, a decrease of $11.4b on the net inflow of $16.5b in June quarter 2005.

Other investment recorded a net inflow of $2.3b, a turnaround of $7.7b on the net outflow of $5.4b last quarter.

Reserve assets recorded a net inflow of $8.6b, a turnaround of $17.7b on the net outflow of $9.1b last quarter due to a decrease in foreign exchange reserves.

INTERNATIONAL INVESTMENT POSITION


INTERNATIONAL INVESTMENT

Australia's net international investment position at 30 September 2005 was a net foreign liability of $539.0b, up $12.0b (2.3%) on 30 June 2005. The increase consisted of:

• net transactions of $14.5b
• price changes of -$2.7b
• exchange rate changes of -$0.2b
• other adjustments of $0.4b.

During the September quarter 2005, the level of net equity liabilities fell $0.7b (0.8%) to $89.3b, reflecting transactions of -$1.7b and other adjustments of -$0.2b. Partially offsetting these decreases were price changes of $0.6b and exchange rate changes of $0.6b.