ECONOMIC ACTIVITY

Nelson Evening Mail, Volume LXXI, 30 March 1938, Page 4

ECONOMIC ACTIVITY

COMMONWEALTH REVIEW I WARNING TO GOVERNMENTS Although internal conditions continue to be healthy, the dependence of Australian economy on external prosperity is commented on by the directors of the Commonwealth Bank in their halfyearly report. So long as employment ! continues to rise, the directors consider that it would be advisable for Governments and semi-public authorities to minimise their capital expenditure.

As a contribution toward the stability of employment, the report states, the correct regulation and timing of capital expenditure is of considerable importance. To secure the maximum benefit from any future capital expenditure it would be wise for public authorities to prepare now specific plans in case they should be needed.

The report points out that economic activity within Australia continues at a high level. There is evidence that the expansion of capacity in the manufacturing industries is being continued. Some of this expansion is due to the stronger competitive position of Australian manufactures. Part of it. however, may be due to the expectation that the increase in the consuming power of the public, evident during the last few years, will be continued at the same rate. Maladjustments may develop if this expectation is not realised, but there is no evidence that they need occasion serious cifficulty.

With the check to recovery abroad Australian export prices have fallen sharply, wool and metals being particularly affected, the report continues. The Australian export price index (base: 1927 equals 100) fell from 96.5 in June to 80.9 in December. Available estimates suggest that production of staple commodities will be above the average. Wool production is estimated at about 100.000 bales more than in 1936-37, while the wheat harvest is expected to reach 175.000.000 bushels, compared with 151.000,000 bushels in the preceding year Sugar and butter also show an improvement. While on the present, outlook the flow of imports is somewhat abnormal, the high level is partly due to the fact that a greater proportion than usual is made up of imports of machinery, the demand for which is unlikely to continue upon the present scale.

The accounts for the half-year ended 31st December, 1937. show a net profit of £765.855. compared with £768.355 in the preceding period.