WA sluggish in two-speed economy

Higher consumption and exports have helped the national economy grow 0.9 per cent in the September quarter, ahead of forecasts, while Western Australian state final demand shrunk around 1.3 per cent.

Australian GDP grew 2.5 per cent, seasonally adjusted, in the 12 months to September, with consumption expenditure increasing 2.9 per cent.

Investment was 4.9 per cent lower while the terms of trade continued to fall, down 10.5 per cent as commodity prices weakened globally.

CommSec economist Savanth Sebastian said the national result would boost household and business confidence.

“Despite some perceptions to the contrary, the Australian economy is doing ok,” he said.

“The economy recorded above-trend growth in the September quarter.

“In fact it was the fastest pace of growth in 18 months.

“And even more encouraging, the result was broad-based with household consumption, exports and government consumption all contributing to the growth story.”

St George Bank senior economist Janu Chan said the result masked some underlying concerns in the economy.

“Growth was entirely driven by net exports, while domestic demand contracted in the quarter,” she said.

“Business investment was the major drag on growth, owing to the decline in mining investment.

“Public spending also detracted from growth, but there has been an encouraging, but gradual pick up in household consumption over recent quarters.”

Looking west

In WA, state final demand, which excludes trade, was lower at $52.5 billion.

That was from a high of $57.1 billion in September 2012. 

Household consumption was up 0.5 per cent, although vehicle purchases fell around 5 per cent.

Private investment fell 3.2 per cent and federal government spending in WA increased 3.8 per cent.

Including trade, however, the state’s economy grew by 0.1 per cent, according to CommSec.

Notably, mining was one of the top performing industries nationally, growing about 0.3 per cent.

That rate was similar to healthcare and second to the financial sector at 0.5 per cent.