Dutch Disease visualised

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After last week’s sectoral chartathon for employment, I thought I’d go back to the first quarter national accounts and see where production is headed sector by sector. The ABS’s Gross Value Added (GVA) is the simplest way to measure the sectoral contribution to GDP. 

The result is the above chart, which shows a number of interesting points.

Firstly, what stands out most is that although mining has surged over the past decade, it is financial services that have outdone everything, by some margin. Next in line is construction which, we can presume, is in part related to development around mining. Next is mining, with the recent flood-related slowdown very obvious in the chart. Also travelling well is professional services, which includes such industries as law, accounting and engineering.

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The value added by manufacturing has actually declined in real terms since 2004. For real estate, it’s worse still, not growing output since 2002.

Flatlined sectors include transport, public, retail, wholesale, IT&T and accomodation and food.

In short, if you have ever wondered why this blog is called Houses and Holes, this chart should clear it up for you.

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Our leaders like to tell us these transformations have been happening for decades and they have, but note that the only comparable period of stalled services and manufacturing output is the 1990’s recession. Seems that’s how it feels to many.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.