Strong signs of Aussie recovery

Growth in Western Australia’s internal economy was slower than most other states in the December quarter, while national output grew 3.1 per cent.

State final demand, which excludes trade, grew 1.5 per cent in WA in the December quarter, according to the Australian Bureau of Statistics.

That was lower than the national rate of 3.3 per cent, and the third last among states and territories.

The ABS does not publish state by state GDP data on a quarterly basis, so state final demand is the best measure available for comparing state performance.

In WA, government spending grew 4.4 per cent, more than any other state, while household spending increased 0.3 per cent, weaker than any state.

Property investment rose 8.9 per cent in WA, while machinery and equipment investment fell 6 per cent.

National

At 3.3 per cent in the quarter, GDP growth showed strong signs of recovery.

That was well above the level expected by the market, 2.5 per cent.

“Today's Q4 GDP figures were undeniably a great result,” HSBC chief economist Paul Bloxham said.

“The jump in activity in the fourth quarter was stronger than expected, which followed a strong result in the third quarter. 

“Overall, following the 7.3 per cent decline in GDP in the first half of the year, GDP bounced by 6.6 per cent% in the second half, leaving it only -1.1 per cent lower year on year. 

“The recovery has been close to 'V-shaped', not quite as rapid a bounce back as was seen in New Zealand, but impressive compared with most of the developed world.”

Mr Bloxham said growth would slow in the first half of 2021, partly because of border closures slowing migration, tourism and education; and because of behavioural changes.

Australian government 5 year bond yields rose 5 basis points to 0.86 per cent today, according to Bloomberg data, and were up 48 basis points across the past month.