Economy activity remains patchy even after a full year of recovery.
And it will most likely stay patchy even when the main measures of activity show the economy is in full swing.
When the Australian Bureau of Statistics (ABS) reports the December quarter national accounts on March 3 it will very probably make it four quarters of expansion in a row.
After a contraction in the last quarter of 2008 growth had seemed a long way off.
But the recovery, unlikely though it seemed a year ago, will not spread the joy around equally either through time or between states and industrial sectors.
The retailers have had their day in the sun, the surge in spending accompanying the cash handouts of late 2008 and early 2009 has washed through the economy and will not be repeated.
Producers of goods and services competing with foreign suppliers – from manufacturers to tourism operators – have enjoyed their moment of competitive advantage when the Australian dollar was trading below 65 US cents.
Those days are long gone too – the exchange rate has averaged over 90 US cents over the past three months.
The new year of 2010 began with apparent confirmation that momentum in the domestic economy may be waning.
The Australian Industry Group (AiGroup) – PricewaterhouseCoopers Australian Performance of Manufacturing Index (PMI) fell in December, the AiGroup said on Monday.
At 48.5, compared with 51.2 in November, the PMI was just under the 50 point level separating expansion from contraction.
The fall marked the end of four months of painfully slow expansion, as the interest rate hikes, the high Australian dollar and ongoing weakness in the major industrialised economies took their toll.
AiGroup chief executive Heather Ridout said the figures showed “the recent recovery remains patchy”.
And patchy it surely is.
In November, eight of 12 sectors within manufacturing expanded, but by December only six were growing.
At the same time, the beneficiaries China’s economic surge and its resulting demand for raw materials are set to go on reaping the gains.
The latest survey of investment intentions from the ABS showed investment in mining in 2009/10 was likely to come in at around $38.5 billion.
The increase of about $33 billion or 580 per cent from 1999/2000 will be greater than the increase in investment in all other industrial sectors combined over the same decade.
It means a continuation of the so-called “two-speed economy”.
That likelihood was acknowledged by Reserve Bank of Australia governor Glenn Stevens in November, when he said the debate over the two-speed economy a few years ago was “really only a preview of what we could see if the resources sector build-up goes ahead”.
A few weeks before that, Treasury secretary Ken Henry said much the same thing in a speech discussing, among other things, the economy’s likely response to “the re-emergence” of China and India as global economic powers.
In that speech, Henry predicted a “considerably larger mining sector, relatively smaller manufacturing and tourism sectors” in response to the sustained rise in Australia’s terms of trade – the ratio of export prices to import prices.
There will be spin-off effect on the manufacturing and services sectors, but by and large the older states of the south-east, NSW and Victoria, can be expected to lag if the two-speed economy persists.
Minerals-rich Western Australia and Queensland should do comparatively well, although Queensland’s tourism sector will struggle with the high exchange rate.
The slow structural shift might be obscured from time to time this year by the infrastructure investment flowing from the second round of fiscal stimulus measures announced by the government in February last year.
But as the economy continues to recover this year and into the next those underlying forces will gradually, but inexorably, assert themselves.