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Growth rate better than expected

Containers at Fremantle's North Quay.

The national economy expanded by a better-than-expected 0.9 per cent through the first three months of the year but the troubles facing WA continue to mount.

The bureau of statistics reported this morning strong net exports and final consumption boosted the overall result which left annual economic growth at a sub-trend 2.3 per cent.

The mining sector, off the back of strong increases in output, added 0.3 percentage points to growth while the banking and insurance sector – aided by record-low interest rates – added another 0.2 percentage points.

Household spending was another contributor while a lift in business inventories was a positive.
But there continue to be soggy parts of the economy.

Total fixed capital formation cut into the overall result while the construction sector – outside of housing – continued to weigh on growth.

It was the strongest quarterly result since the March quarter last year. Despite the strong result, it still leaves the economy growing at a rate not fast enough to cut into unemployment.

The result had an immediate impact on currency markets with the Australian dollar shooting through US78 cents. Only yesterday the Reserve Bank said it believed the dollar needed to fall in value to boost the economy.

The figures also revealed the depth of problems facing the WA economy.

State final demand, which measures domestic economic activity and not exports and imports, fell by 1.8 per cent in the quarter.

It was the sixth successive quarterly fall in final demand which is now 6.5 per cent lower than its peak in the September quarter of 2013.

The bureau said non-dwelling construction was the biggest detractor from growth, slipping 4.9 per cent in the quarter.

“This continues the emerging trend of falling State final demand and aligns with the decline in activity on large scale projects,” the bureau said.

There was only “moderate” growth in spending through hotels, cafes and restaurants and in electricity.