Western Australia’s domestic economy is showing mixed results in the latest national accounts, growing by 0.4 per cent after two consecutive quarters of decline.
The 0.4 per cent growth (state final demand) follows a contraction last quarter of 0.4 per cent, revised down from 0.2 per cent growth.
Business investment has grown by 1.8 per cent – the first growth since December 2017. This was led by an increase in investment in machinery and equipment which signals businesses are optimistic about the future.
We expect the rise in business investment to begin to filter through to households in the form of higher employment and wages growth soon.
WA households are however still feeling the pinch, with a slight backwards step in household spending of 0.1 per cent.
This is making things difficult for sectors that are reliant on consumer discretionary spending, such as retail, that are already struggling with online competition and a State Government forcing them to reduce opening hours this Christmas.
This is supported by the latest WA Super–CCI Business Confidence Survey which revealed that business confidence in WA has reached its highest level since March 2013 – a five-year high – as optimism rises about the State’s economic outlook.
This optimism isn’t however flowing through to retail, with 34 per cent of retailers expecting conditions to deteriorate over the coming year and 52 per cent expecting no change in economic conditions.
One way the State Government can act now to support local WA retailers is to review their decision to reduce extended shopping hours over Christmas by 30 per cent this year.
CCI will release its forecasts for the WA economy in January which will include a comprehensive analysis of what to expect from the next three years of economic activity.