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Survival of the fittest: Hagop’s commentary

Wednesday, 12 March 2008
By Print21

The printing industry continues to be in recession according to the December 2007 quarter national accounts figures released today by the Australian Bureau of Statistics (ABS).

The December quarter data shows that the printing, publishing and recorded media industry declined by 1.7 per cent during the quarter on trend basis resulting in an annual decline of 2.1 per cent.

The release of the national accounts data brings to an end major macroeconomic data for the December quarter. Last Thursday the new capital expenditure data was released and on Monday this week sales and profit data became available.

New capital expenditure was reported to have increased by 3.8 per cent in the quarter compared to the September quarter. The year on year increase was 9.3 per cent.

Total new capital expenditure announced last week for the year to December totalled $627 million, representing a decline of 10.3 per cent compared to the outcome a year earlier.

Sales data shows that industry sales fell by 1.8 per cent – the third consecutive quarter fall. Total industry sales for the year to December 2007 however totalled almost $19.9 billion which represents an improvement of 13.1 per cent on the same period a year earlier.

Pre-tax profits in the printing, publishing and recorded media sector was reported to have improved by 6.6 per cent for the December quarter compared to the September quarter. Compared to the same period a year earlier, the December quarter figures represent an improvement of 45.9 per cent.

Total pre-tax profits for the year to December totalled more than $2.9 billion which represents an improvement of 52.1 per cent on the outcome achieved during the same period a year earlier.

Since the ABS only surveys companies employing more than 20 employees to calculate the profit data, it once again demonstrates that printing companies employing more than 20 employees (comprising approximately 15 per cent of the industry by number of establishments) are more profitable.

The national accounts data shows that the Australian economy grew in trend terms by 0.8 per cent during December 2007 quarter and by 3.9 per cent during the year to December.

Key drivers of economic activity were household consumption expenditure, business investment and government expenditure, with net exports detracting from growth.

Payment to employees increased by 0.8 per cent during the quarter and by 7.7 per cent during the year to December. Private sector gross operating surplus increased by 3.5 per cent during the quarter and by 10.7 per cent during the year to December.

The wages share of the economy remained stable at 53.9 per cent while the profit share fell from 26.8 per cent to 26.6 per cent.

Growth rates among the states and territories show Western Australia grew by 9.5 per cent during the year to December followed by Tasmania which grew by 6.7 per cent, Queensland 6.6 per cent, Victoria 4.7 per cent, New South Wales 4.6 per cent, Northern Territory 2.5 per cent, South Australia 1.8 per cent and Australian Capital Territory 1.7 per cent.

At an aggregated industry level retail trade, manufacturing, agriculture, forestry and fishing, finance and insurance, property and business services and ownership of dwellings were all reported to have contributed to growth.

Printing Industries national manager for policy and government affairs, Hagop Tchamkertenian, described the December growth national accounts figures as very disappointing.

"The December quarter data shows that both the manufacturing sector and the Australian economy continued to expand yet our industry reported the third consecutive quarter fall," he said.

"The next quarter is likely to be an equally challenging quarter for our industry as it faces seasonal influences as well as the economic dampening impact associated with yesterday’s decision to raise official interest rates".

Hagop said that given the Reserve Bank’s current crusade to bring inflation under control, growth prospects were likely to be, at best, average for the remainder of 2008.

"Sectors of our industry that rely on robust economic activity are expected to face challenging times as the economy starts to moderate over the coming months," he said.

"Printing companies must start to adapt to an economic environment that is likely to be considerably less robust."

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