A solid quarter of business investment growth has helped offset a sharp slowdown in government investment. CCIWA Senior Economist Sam Collins explains.
The latest national accounts data released this morning shows WA’s domestic economy (measured by State Final Demand) grew 0.2% over the March quarter – the weakest quarter of growth since March 2024.
Over the year, WA’s economy has grown 3.0% in annual average terms, down from the 3.4% recorded in December and is now the slowest pace of growth in four years. Despite the slowdown, WA continues to have the fastest pace of economic growth of all states in the nation.
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- Source: ABS
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- Source: ABS
Growth this quarter was largely driven by business investment, which rose 2.9% over the quarter on the back of new engineering construction as well as machinery and equipment investment. In annual average terms, business investment has grown 0.7% as investment activity has held at elevated levels following a sharp increase over 2023-24.
Household consumption was flat over the quarter (+0.0%), as rises in spending on dwelling services, clothing, and recreation and culture were offset by falls in electricity, health and household items. The flat reading implies consumption per capita fell over the quarter, while the annual pace of growth (1.8%) is now the weakest since March 2021.
Dwelling investment, the smallest sector of the economy by expenditure, grew 1.6% over the quarter. This was driven by an increase in activity for both new and used dwellings as well as renovations. This takes the annual pace of growth to 4.6%, the fastest pace in a year, as easing supply constraints in the sector are allowing capacity to gradually catch up to the strong demand for housing.
In a change from the previous two years, the biggest drag this quarter came from government investment, which fell a huge 10.1%. Despite this, government investment has still grown 16.1% over the year in annual average terms, highlighting the significant increase in public investment over the last few years.
What this means for WA businesses
The weaker pace of growth over the quarter shows economic momentum has clearly slowed, especially without the same level of assistance coming from public investment this quarter. However, this is unsurprising given the significant headwinds faced by all sectors of the economy over the past few years. At the same time, the high levels of growth WA has achieved would have been difficult to maintain over an extended period.
Despite this, CCIWA believes that WA’s economic fundamentals remain strong and that growth should continue at a solid pace, albeit slower than recently experienced.
CCIWA’s Economic reports are available exclusively to CCIWA Complete, Advantage and Corporate Members. For more, see CCIWA’s Economic Insight page.
