06/12/2017 - 12:13

WA economy on the mend

06/12/2017 - 12:13

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The Australian economy expanded at a slower-than-expected rate in the three months to September, however WA’s domestic economy appears to be on the mend, growing 0.9 per cent for the quarter.

WA economy on the mend
Consumer spending remained weak, under pressure from rising household debt and soft wages growth.

The Australian economy expanded at a slower-than-expected rate in the three months to September, however WA’s domestic economy appears to be on the mend, growing 0.9 per cent for the quarter.

The national economy grew 0.6 per cent in the September quarter, taking the annual rate of growth to 2.8 per cent, the Australian Bureau of Statistics said on Wednesday.

That was slightly lower than market expectations for quarterly growth of 0.7 per cent and 3.0 per cent over the year to September.

September quarter growth compared with a revised 0.9 per cent in the June quarter.

Chamber of Commerce and Industry WA (CCI) Chief Economist Rick Newnham said the last time WA’s domestic economy grew faster than Australia’s was June 2015.

“Although we still have a long way to go to reach the boom levels of 2012, this is positive news for WA’s economy, which has been struggling to transition from mining construction to production,” Mr Newnham said.

“The domestic economy most strongly reflects the economic environment that WA households experience – as the domestic economy grows it is good for jobs, business investment and household spending.

“This 0.9 per cent growth has been driven by increased spending in non-dwelling construction, plant and machinery, showing confidence has returned to WA businesses.” 

The Australian dollar dropped, slipping to US75.84 cents by 1230 AEDT, from US76.13 cents ahead of the release of the data at 1130 AEDT.

The figures showed 17 out of 20 industries recorded growth during the quarter, underlining an improvement in business conditions and growth in corporate earnings over the past few quarters.

However, consumer spending remained weak, under pressure from rising household debt and soft wages growth.

Household consumption expenditure increased only 0.1 per cent in the September quarter, making it the lowest quarterly rate of growth since the March quarter of 2005.

Economic growth was also affected by a 7.5 per cent decline in public investment during the September quarter, as state and local government spending returned to normal after the previous quarter's growth was inflated by the South Australian government's acquisition of the Royal Adelaide Hospital.

International trade also did not contribute to third quarter economic growth due to a decline in commodity prices, despite both export and import volumes rising in real terms.

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