After the extraordinarily explicit guidance from Glenn Stevens in Hobart last month about Reserve Bank language, the governor’s brief statement today has but the smallest of crumbs from which the RBA-watching industry can try to make a meal.
What’s much more interesting is to combine the statement with today’s trade figures and feel the pain between the lines of the big, implicit ''if only'': Australia is actually doing an extraordinary export job beyond iron ore, and.If only the exchange rate was weaker, then it could be absolutely amazing.
The extent of the difference between today’s Reserve Bank statement and last month’s was just two paragraphs hosing down anyone wanting to get excited about a possible new bias towards an interest rate rise.
Stevens effectively says that, yes, the recent inflation figures were a bit higher, but it’s nothing to worry about for a couple of years.
And, yes, housing prices continue to rise, but the rise hasn’t been as strong as it was last year. Rates are staying steady. Nothing to see here, move along.
I’m left to imagine, though, that the governor would have felt regret and increasing frustration as he repeated, again, his lines about the exchange rate remaining high.
The potential impact of a weaker Aussie was on display earlier in the day within the Australian Bureau of Statistics’ June goods and services trade figures.
While everyone tends to concentrate on what iron ore and coal have been up to, the statistics contain a story of heroic export performance by our services sector, succeeding and growing despite the strong dollar.
As the accompanying graph shows, our exports of services have been growing strongly over the past two years.
To put some perspective on it, using unadjusted data, total services exports grew 9.1 per cent in the latest financial year to $57.6 billion.
That’s 43 per cent more than the value of our coal exports and $531 million greater than what our iron ore miners managed in 2012-13.
So much for the ''Australia’s just a quarry'' chorus.
OK, iron ore kicked on big time in 2013-14 to $76 billion, or 27 per cent of total exports, as production ramped up.
But it’s services’ performance in the face of a strong dollar that should provide greater optimism about Australia being able to pull off its transition from reliance on resources developments.
Our travel industry increased exports by 8 per cent to $33.6 billion. ''Other services'', which includes education, grew 12 per cent to $17.4 billion. (Specifically tourism-related services earned us $36 billion, an increase of 7.3 per cent, while our tourism debits grew 6.7 per cent to $37 billion, narrowing our much-touted tourism deficit to just $1 billion.)
Crucially, it’s the services sector that has the best employment potential. With the construction phase winding down, the miners are more machinery than men and women.
As our dollar has pushed us up the value chain, the services performance is outstanding – leaving us to wonder what we might be capable of with a currency tailwind instead of a headwind.
And then there’s the other side of the services ledger, where our ''debits'' increased by 8.4 per cent to $71.9 billion.
A weaker Australian dollar should encourage local services as much as it would assist local manufacturers. It would also boost the bottom line of our farmers and miners. Yes, if only ...
Yet to come for our trade story is the impact of our rapid natural gas export expansion as LNG trains come on line over the next two years.
Natural gas exports increased from $14.3 billion in 2012-13 to $16.4 billion in the latest year, but on that front, we ain’t seen nuthin’ yet.