WA economy faces second-half headwinds
WA economy faces second-half headwinds

The WA economy is being hit by more than just lower iron ore prices, with a recent fall in building approvals contributing to a softer outlook for the second half.

Iron ore prices have fallen from $US149 a tonne in April to less than $US90 a tonne this week - the lowest level since December 2009.

Certain spot prices for low-grade iron ore slipped as low as $US79 a tonne today, according to stockbrokers Patersons.

Lower iron ore prices are expected to wipe $1.5 billion off the state budget this year.

Also today, a report on economic activity in the state by the Chamber of Commerce and Industry of WA and Westpac forecast continuing softness in parts of the economy not linked to the mining sector in the six months to December 31.

Business investment intentions fell for the sixth consecutive month in June, the report said.

Changes to WA's Building Act continued to hit building approvals, which fell by nine per cent in June after dips of 1.1 per cent and five per cent in the preceding two months.

Lending finance fell by 2.4 per cent over the month, but was likely to improve as interest rate cuts began to filter through to the economy, Westpac/CCIWA said.

"Conditions outside of the resources sector will remain challenging for businesses heading into the second half of the year," the report said.

"However, the weakness in the non-resources economy will continue to be offset by strength in resources-related construction and investment activity."

Westpac WA general manager Jay Watson said the retail market remained subdued, with both commercial and consumer clients trimming their use of credit cards, but the first home buyer market had picked up considerably.

The West Australian

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