The economy
generated strong growth in the June quarter, and the latest
jobs data also surprised all the pundits with 32,000 new jobs in August and
unemployment steady at 5%.

For the June
quarter, gross domestic product rose 1.3 per cent, its fastest quarterly rate in
18 months, while annual growth was up to 2.6 per cent, driven by a 6.8 percent
lift in business investment.

Housing
construction, private consumption and government spending were also slightly up.
The statistical discrepancy contributed strongly, showing in part the effect of
high export prices.

“The best thing
about these national accounts is business investment … that is investment for
the future,” Mr Costello said.

There are two
domestic flies in the ointment. Inflation is on the rise, and this tendency
will be reinforced by low or even declining productivity. And while the current
account deficit (CAD) was lower in the June quarter, exports are still far too
low and may not revive quickly enough to take Australia out of the danger zone due
to a crook CAD.

Internationally,
the price of oil is the biggest fly, but a retreat from the post-Katrina US$70
has been welcomed by sharemarket punters.

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