Iron ore is the state's single largest export.

WA exports surge, but retail stagnates

Thursday, 5 October, 2017 - 14:11
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Western Australia’s exports are continuing to grow, with $122.5 billion shipped overseas in the past 12 months, up 22 per cent from the same period to August 2016, but retail sales data shows that it is too early to call a recovery.

Exports to the state’s three major trading partners were all up, according to the latest data from the Australian Bureau of Statistics.

Sales to China were $61.2 billion in the 12 months, 28 per cent higher than in the previous corresponding period.

That was the strongest 12 months for exports to China since the period to August 2014.

On a monthly basis, exports to China were $5.2 billion, the highest August number since 2013.

Shipments to WA’s second largest trading partner, Japan, were $16.3 billion in the 12 months to August 2017, up nearly 16 per cent on the previous corresponding period, while sales to South Korea of $6.9 billion were 18.5 per cent higher.

Nationally, Australia recorded a seasonally adjusted trade surplus of $989 million in August, down around $282 million on the July numbers.

Total exports were $32.2 billion in the month, meaning WA sales were worth around a third of the total.

CommSec chief economist Craig James said the trade surplus contributed to a record performance.

“Australia has recorded its largest ever surplus for a 12-month period, a surplus of $16.8 billion in the year to August,” Mr James said.

“The services accounts are in the black.

“(National) exports to China over the past year were a record, just below $100 billion.

“And exports to India are running at a near 70 per cent annual growth rate.

“The strength in exports will generate fresh income flows into Australia and add to wealth levels.”

Internal stagnation

Retail trade data, also released by the Australian Bureau of Statistics, showed WA retail sales were down 0.6 per cent in August, seasonally adjusted.

That was in line with a national fall of 0.6 per cent nationally.

There was one positive for WA. Western Australians spent more at retailers in the year to August 2017 than any 12-month period on record, not adjusting for inflation, at $34.1 billion.

But growth levels in retail sales are significantly lower than during the boom years, with the average year on year growth rate for the past decade around 4.5 per cent.

In the year to August, seasonally adjusted growth was just 0.8 per cent.

Takeaway food, restaurant and cafe spending was up in WA by around 6 per cent in August compared with the same month in 2016, while spending on clothing and furniture dropped by 7 per cent and 6 per cent respectively.

St George Bank senior economist Janu Chan said nationally, consumers had hit the brakes in recent months.

“Retailing in August contracted 0.6 per cent,” Ms Chan said.

“Moreover, July’s flat result was revised downwards to be a 0.2 per cent contraction.

“The upward momentum that had occurred over the June quarter has quickly been lost over the September quarter.

“The annual pace of growth has eased from 3.7 per cent in June to 2.1 per cent in August.

“Apparently, Australians were dieting over August.There were sizeable declines in food retailing and cafes restaurants & takeaway food services.

“Household good retailing and clothing, footwear and personal accessories also contracted.

“Retailing in department stores and other retailing were the only categories that rose in August.”

Mr James said the declines were sizeable.

“It may be that retailers trimmed prices to encourage higher sales,” he said.

“And weighty electricity and gas bills may also have prompted consumers to cut discretionary or non-essential spending.

“Consumers are also still adjusting their mindset to lower wages growth.

“Wages are still outpacing prices but the slower nominal wages growth makes consumers feel poorer.”