WA businesses are becoming more confident about the economic outlook and planning to invest in and expand their operations this year, according a leading index.
The Westpac - CCI Leading Index of WA Economic Activity for December rose 0.9 per cent in for the month, up 4 per cent in annual terms.
CCI chief economist John Nicolaou said the data pointed to a turn around in fortunes for the local economy after a sustained period of patchy conditions and global economic uncertainty.
"The main driver of the index's performance was a greater confidence from WA businesses about the prospects of the local economy with many businesses looking to expand their operations over the next year," he said.
"This has also seen an increase in demand for finance with total lending in WA growing by 2.4 per cent, which is the sixth consecutive month of increases.
"Chinese steel production also continues to positively contribute to the rise in the Westpac - CCI Leading Index of WA Economic Activity, despite easing over the last three months."
However Mr Nicolaou said continued softness in the housing sector, with building approvals down 2.3 per cent, as well as the local labour market, where the numbers of hours worked in WA fell, had weighed on the index.
"Despite these mixed signals, the improvement in the index provides a degree of confidence that 2012 will see the local economy strengthen," he said.
The index, which is the first of its kind in the State, seeks to provide an insight into the future performance of the local economy, by combining seven leading economic variables.
Westpac State general manager Jay Watson said the bank was starting to see an uplift in borrowing activity and inquiry.
"We are optimistic that confidence within the business community is growing," he said.
"It's also encouraging to see activity improving outside of the mining and resources sector, with modest growth seen within the retail sector and food industries."