06/06/2018 - 10:41

Local GDP boost

06/06/2018 - 10:41

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Western Australia has recorded its first year-on-year economic growth in more than four years, while the national economy expanded 1 per cent in the March quarter, official figures show.

There was a strong rise in iron ore exports in the March quarter.

Western Australia has recorded its first year-on-year economic growth in more than four years, while the national economy expanded 1 per cent in the March quarter, official figures show.

WA grew 0.2 per cent on an annual basis, according to the latest data from the Australian Bureau of Statistics; the last time the state registered positive annual growth was four and a half years ago.

“Piece by piece we are putting together a more optimistic outlook for the future of the WA economy,” Chamber of Commerce and Industry of WA chief economist Rick Newnham said.

“Although domestic growth is just 0.2 per cent, year on year, it is driven by rebounding household consumption stemming from increased optimism in WA households.

“Household consumption has grown by 1.5 per cent year on year after weak growth in 2016-17. 

“There are better signs for job creation with business investment falling by just 4.4 per cent.”

On a national level, Australia grew 3.1 per cent over the 12 months to March.

The growth is slightly ahead of market consensus forecasts, which had predicted quarterly growth of 0.9 per cent and an annual improvement of 2.8 per cent.

A strong rise in exports, in particular those for coal, iron ore and liquefied natural gas, accounted for half the increase in Australia's gross domestic product (GDP) in the quarter, figures from the Australian Bureau of Statistics show.

The Australian dollar has gained on the latest data, rising to US76.56 cents at 1137 AEST, from US76.35 cents immediately before the release.

ABS chief economist Bruce Hockman said the growth in exports, in particular mining commodities, accounted for half the growth in GDP.

The improvement in exports of goods and services in the March quarter follows a 1.8 per cent drop in the December quarter.

Profits for non-financial sector companies rose 6 per cent in the quarter - the strongest growth since the December quarter of 2016 - largely reflecting the improved profits of mining companies which have benefited from higher iron ore and coal prices.

Consumer spending remained weak, rising 0.3 per cent in the March quarter, with much of that increase going towards spending on insurance, energy bills and fuel bills, while spending at restaurants and on alcohol slipped by about 2 per cent.

BIS Oxford Economics head of macroeconomics Sarah Hunter said weak spending remained a weight on the economy.

"With jobs growth slowing sharply, wage rises still tracking inflation (resulting in no real wage gains for the average worker), and house price falls reducing households' net worth, we expect spending momentum to remain subdued through the rest of this year," Ms Hunter said in a research note.

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