National growth accelerates in June
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State final demand lifted 0.2 per cent in Western Australia in the June quarter, while national GDP growth hit its fastest level in more than 5 years at 3.4 per cent in the 12 months to June.
The data shows WA’s internal economy (excluding exports) is slowly coming out of a slump that has lasted since the end of the resources boom, with quarterly final demand peaking at $60.4 billion in September 2012.
At $50.9 billion, it is also slightly higher than the June quarter of 2017, when it came in at $50.6 billion.
Despite the evidence WA is turning the corner, it is still the third poorest performing jurisdiction by this measure, after Queensland on 0.1 per cent and the Northern Territory on -2.3 per cent.
Nationally, GDP growth was 0.9 per cent for the quarter.
Annual growth of 3.4 per cent was up from 3.2 per cent in the year to March, a level above the 20 year average of 3.1 per cent.
St George senior economist Janu Chan said growth in the quarter was broad based, led by household and government spending.
“A decline in the household savings ratio indicated consumers continued to dip into their savings buffer to fund spending,” Ms Chan said.
“Households are unlikely to be able to sustain this over the longer-term suggesting households will struggle to maintain (their) current pace of spending growth.
“The economy has grown at a robust pace over the first half of 2018, and above most estimates of potential growth.
“In light of today’s data we now have greater confidence that economic growth over 2018 will sit above 3 per cent.
“We continue to expect that the economy will grow at a pace which will be at or close to the potential rate of growth over the medium-term.
“That said, there are downside risks to the Reserve Bank of Australia’s expectation for growth to average 3.25 per cent in 2019.”
Commsec chief economist Craig James said there were good reasons to expect expansion would continue for some time to come.
“We wouldn’t quibble with the Reserve Bank’s expectation of 3.25 per cent growth during 2018/19, already the economy is growing at a faster rate,” Mr James said.
“Looking forward there are a few challenges.
“Global trade discussions are on-going between the US and a host of other nations.
“If trade wars develop, that could work to slow global growth.
“Then there is the east coast drought that has the potential to trim economic growth directly as well as through knock-on effects to other industries and regions.
“It is important to highlight that Aussie consumers and spending and that the growth of spending is actually ‘above-normal’.
“There is so much misinformation concerning consumer spending, generally of the form that consumers are keeping a tight grip on their wallets.
“Wages are still growing faster than the cost of living while the stronger job market is adding to the economy’s spending power.
“Wages are lifting and unemployment continues to fall.
“Add in low and stable interest rates and there are good reasons to expect Aussie consumers to keep on spending.
“Home building, exports, business investment and spending on infrastructure will also support the economy over the next year.”