The following feature articles appear in detail in the publication and are available on the ABS web site.
WESTERN AUSTRALIA'S CHANGING TRADE RELATIONS - THE EMERGENCE OF CHINA AND INDIA
The direction of Western Australia's trade has seen major changes over the ten years to 2003-04, reflecting economic changes in Asia. In particular, China and India have emerged as two of the state's leading trade destinations, accounting for 11.4% and 6.6% of total merchandise trade respectively in 2003-04. This article reviews Western Australia's international trade relations over the ten years to 2003-04. It then explores in more detail the state's trade relations with the emerging markets of China and India.
DISABILITY, AGEING AND CARERS IN WESTERN AUSTRALIA
Family members and friends are the main providers of care to people with disabilities and to the frail aged. While caring is often rewarding, it can also involve substantial personal and financial cost. Information about the circumstances of people with disabilities, the frail aged and carers is important to inform government policy and to determine the need for formal support and services. This article highlights selected findings from the 2003 Survey of Disability, Ageing and Carers (SDAC) for people living in Western Australia.
The Western Australian economy grew by a moderate 0.5% in the March Quarter 2005, according to the trend chain volume series of state final demand. Growth in state final demand more than halved in the March quarter, from an increase of 1.1% in the December Quarter 2005. The largest contribution to growth during the period was business investment on intangible fixed assets, increasing by 8.9% in seasonally adjusted chain volume terms. Business investment also increased on machinery and equipment (up 1.2%). The government sector reduced its contribution to the state economy in the March Quarter 2005, with final consumption expenditure by all levels of government decreasing by 1.6% and national government investment declining by 12.3%.
The value of Western Australia's exports increased by 13.8% between the March quarters of 2004 and 2005, driven by increased production capacity in the resources sector, higher commodity prices and strong global demand for minerals and energy. The major commodities to increase their value of exports during the period were Metalliferous ores and metal scrap (up 38.4%), Crude petroleum oil (up 31.9%) and Natural and manufactured gas (up 50.4%). Over the same period, the value of Western Australia's imports grew by 16.7%, supported by strong domestic demand, a high $A and tariff reductions on some imported goods.
The number of employed persons (trend) grew by 1.8% in Western Australia over the three months to May 2005, more than double the national increase of 0.8%. Despite this strong performance, the state's unemployed persons (trend) also increased over the period, rising by 3.6% - three times the national increase of 1.2%. Much of this growth in unemployment can be attributed to West Australians entering the labour market, with the state's labour force rising by 20,600 persons and the participation rate increasing from 67.0% to 68.1% between February and May 2005. The increase in unemployed persons has seen the state's unemployment rate rise slightly, from 4.7% in February 2005 to 4.8% in May 2005.
State final demand
Growth continued to moderate in Western Australia's state final demand (trend chain volume terms) in the March Quarter 2005, rising by 0.5% ($116 million), following increases of 1.5% (September) and 1.1% (December) in the previous two quarters. Generally, the rate of growth in state final demand has been in decline since peaking at 2.6% in the June Quarter 2003. Nationally, domestic final demand increased by 0.6% in the March Quarter 2005.
STATE FINAL DEMAND, Chain volume measures - Change from previous quarter
In seasonally adjusted chain volume terms, state final demand in Western Australia increased by 1.0% ($212 million) in the March Quarter 2005. The largest contribution to growth during the quarter was business investment on intangible fixed assets, increasing by $34 million (8.9%), mainly due to an increase in petroleum exploration expenditure. Business investment also increased on machinery and equipment, rising by $28 million (1.2%) during the quarter. Other notable contributions to growth in state final demand were: state and local government investment (up $34 million or 10.4%); household final consumption expenditure on other goods and services (up $32 million or 3.7%); and private investment on new and used dwellings (up $28 million or 3.8%).
The main detractor from growth in state final demand in the March Quarter 2005 was the government sector. Final consumption expenditure by all levels of government decreased by $54 million (1.6%), and national government investment in the state fell by $10 million (12.3%). Further reducing growth during the quarter were declines in household final consumption expenditure on food (down $18 million or 1.4%) and operation of vehicles (down $10 million or 1.5%).
Consumer Price Index
Growth in Perth's Consumer Price Index (CPI) eased slightly to 0.8% in the March Quarter 2005, following an increase of 0.9% in the previous quarter. Prices growth in Perth during the March quarter was slightly above the national average of 0.7%.
The main contributor to Perth's CPI growth in the March Quarter 2005 was Housing (up 2.4%), largely driven by the impact of rising labour and materials (timber and steel) costs on the purchase price of housing. Other notable contributions were Food (up 1.0%), mainly due to an increase in vegetable prices; and Health (up 3.6%), attributable to the cyclical effect of the Pharmaceutical Benefits Scheme (PBS) safety net and an increase in the patient co-payment for PBS prescription pharmaceuticals from 1 January 2005.
The major detractor from prices growth in Perth in the March Quarter 2005 was Transportation (down 1.4%), mainly due to easing petrol prices and a drop in the list prices of some motor vehicles following import tariff cuts in January 2005, as well as competitive pricing between dealers to clear stocks of 2004 plated vehicles. Household furnishings, supplies and services (down 2.6%) and Clothing and footwear (down 1.4%) also contributed to price decreases in the March quarter, as department and specialty stores held their post-Christmas and New Year sales.
CONSUMER PRICE INDEX (ALL GROUPS), Change from same quarter previous year
Perth's CPI rose by 3.4% between the March quarters of 2004 and 2005, well above the national increase of 2.4% over the same period. Perth's higher annual growth was mainly due to food, housing and recreation prices rising by more than the national average. Although the national CPI increased within the Reserve Bank of Australia's (RBA) target range of 2.0%-3.0%, the RBA cautioned that price pressures could arise from higher oil (and other commodity) prices, as well as capacity constraints in some parts of the economy, including the labour market.
Wage Price Index
Wages growth eased in Western Australia in the March Quarter 2005, with the state's quarterly index of total hourly rates of pay (excluding bonuses) increasing by 0.9%, following a rise of 1.4% in the previous quarter. Growth in the state's wages during the March quarter was slightly lower than the national average of 1.1%.
The main (selected) industries contributing to Western Australia's wages growth in the March Quarter 2005 were Education (up 1.3%) and Accommodation, cafes and restaurants (up 1.1%). Among the selected occupations, Tradespersons and related workers (up 1.8%) and Associate professionals (up 1.6%) recorded the highest quarterly wages growth in the state. The RBA suggests that shortages of skilled labour in the construction and resources sectors, and in parts of the business services sector, may be contributing to higher wages in these occupations.
WAGE PRICE INDEX, Change from same quarter previous year
Western Australia recorded wages growth of 4.5% between the March quarters of 2004 and 2005 - well above the national increase of 3.9% and higher than any other state or territory over the period. The main (selected) industries driving the increase were Manufacturing (up 4.4%), Government administration and defence (up 4.2%) and Education (up 4.2%). Among the selected occupations, the highest annual wages growth was recorded by Labourers and related workers (up 8.1%) and Tradespersons and related workers (up 7.2%). Wages growth in these occupations was driven by continued strong activity in the state's mining and construction sectors, coupled with a shortage of skilled workers.
The RBA has noted that, while aggregate wages growth remains contained, there are greater wage pressures in industries facing strong demand, such as construction and mining. They caution that labour shortages are becoming increasingly broad-based across industries and skill levels, and business surveys indicate that difficulty in finding suitable labour has become a key factor constraining output. This could lead to wage pressures building in the economy in the longer term.
New motor vehicle sales
Sales of new motor vehicles (trend) in Western Australia increased for the fourth consecutive month in May 2005, rising by 0.3% to 8,115 vehicles. This upturn can be attributed to strong consumer confidence, a high $A and lower prices paid for imported vehicles since tariffs were reduced in January 2005. All of these factors have helped to consolidate the state's vehicle sales at historically high levels.
Over the three months to May 2005, sales in Western Australia rose by 1.1% compared to the preceding three months, more than double the rise nationally (0.5%). Growth in the state was driven by sales of both Other vehicles (including vans, trucks and buses) and Passenger vehicles - up 3.0% and 1.3% respectively over the period. Partially offsetting growth was a fall in Sports utility vehicle sales - down 1.5%.
NEW MOTOR VEHICLE SALES(a)
In original terms, Western Australia's new motor vehicle sales were 9.6% (2,107 vehicles) higher in the three months to May 2005, than in the same period of 2004. Growth over the period was supported by increased sales across all motor vehicle types, including Sports utility vehicles (up 12.4% or 515 vehicles), Passenger vehicles (up 11.0% or 1,390 vehicles) and Other vehicles (up 3.9% or 202 vehicles).
Retail turnover (trend) in Western Australia increased by 0.5% in the three months to April 2005, compared to the previous three months, equivalent to the increase recorded nationally. This followed a modest increase of 0.2% in the state's retail turnover in the three months to January 2005. After a sustained period of strong growth, increases in retail expenditure have moderated in 2005, coinciding with a period of interest rate uncertainty. Most recently, the RBA increased official interest rates in March 2005.
MONTHLY RETAIL TURNOVER, Current prices
The main drivers of the increase in retail turnover, over the three months to April 2005, were expenditure on Household goods, up $21 million (2.4%); Recreational goods, up $16 million (6.0%); and Clothing and soft goods, up $6 million (2.2%). These increases were partly offset by a $25 million (4.8%) decline in Other retailing expenditure (which includes pharmaceuticals, cosmetics, antiques, garden supplies and jewellery).
INVESTMENT AND FINANCE
Private new capital expenditure
Business investment (trend chain volume terms) in Western Australia increased by 4.5% ($112 million) to $2,614 million in the March Quarter 2005 - the third consecutive quarterly increase. Growth in business investment was mainly driven by expenditure on Equipment, plant and machinery, rising by 4.2% to $1,451 million. Investment on Buildings and structures also increased in the March quarter, up by 3.5% to $1,149 million - the twelfth consecutive quarterly increase. Recent growth in business investment has been driven by the state's resources sector, expanding its capacity and infrastructure in response to strong global demand for minerals and energy, particularly from China.
PRIVATE NEW CAPITAL EXPENDITURE, Chain volume measures
In original current price terms, business investment in Western Australia was 26.2% ($491 million) higher in the March Quarter 2005 than in the same quarter of 2004. Over the period, investment in Manufacturing almost doubled, increasing by 93.3% ($196 million) to $406 million - the highest level of investment in Manufacturing since the September Quarter 1998 ($410 million) - mainly driven by metal products manufacturing. Investment also increased in Mining and Other selected industries (comprising Retail trade, Construction and Property and business services), rising by 14.2% ($149 million) and 23.8% ($146 million) respectively.
According to the Western Australian Department of Treasury and Finance, the outlook for business investment in Western Australia remains positive, supported by strong commodity prices and high rates of capacity utilisation. Work is continuing to progress on several large projects, and is expected to commence on the Enfield oil and gas field and the Ravensthorpe nickel project in the latter half of 2004-05. However, recent reports have indicated that shortages of skilled labour have impacted on the cost of some projects, and the availability of skilled labour and materials could be a potential constraint on business investment in the short term.
Housing finance commitments
West Australians have continued to increase their borrowing for housing since a downturn in mid-2004. In April 2005, the number of housing finance commitments (trend) rose by 1.2% to 7,674 - the eleventh consecutive monthly increase and the highest level of commitments since the monthly series began in April 1985.
Much of the growth in housing finance commitments since mid-2004 has been driven by first home buyers, reflecting the impact of increased stamp duty concessions in the latter half of that year. The number of housing finance commitments (original) for first home buyers rose by 36.1% in the three months to April 2005, compared to the same period of 2004 - much higher than the 6.2% increase recorded for non-first home buyers over the same period. The average loan size for first home buyers increased by 13.3% to $170,700 in the three months to April 2005, compared to the same period a year earlier, while the average loan size for non-first home buyers rose by 12.0% to $175,300.
HOUSING FINANCE COMMITMENTS, Number of dwellings financed
Growth in the total value of housing finance commitments (trend) in Western Australia moderated slightly in the three months to April 2005, rising by 4.5% ($168 million), following a rise of 5.2% ($187 million) in the previous three months.
In trend terms, 5,070 houses were approved in Western Australia over the three months to April 2005, an increase of 1.8% when compared to the previous three months. However, approvals for the last two months of the period declined slightly. Nationally, house approvals fell by 0.8% over the three month period.
NUMBER OF DWELLINGS APPROVED, Houses: Trend
In current price terms, the value of new houses approved in Western Australia decreased by 2.1% to $790 million in the three months to April 2005, compared to the preceding three months. Nationally, the value of new house approvals increased by 4.3% over the same period. The value of non-residential building work approved in the state increased by 12.4% to $516 million over the period. This was largely due to a $208 million public sector building approval in Australia's external territories, which was included in Western Australia's data for February 2005.
The value of Western Australia's trade surplus increased by $599 million (12.0%) between the March quarters of 2004 and 2005, rising to $5,571 million. Over the period, growth in the value of the state's exports (up $1,095 million) was more than double the growth in the value of imports (up $497 million). Western Australia's resources sector continues to drive the state's export growth, aided by increases in production and transport capacity, high commodity prices and strong global demand. Growth in imports continues to be supported by strong domestic demand, a high $A and tariff reductions on some imported goods.
VALUE OF WESTERN AUSTRALIA'S TRADE SURPLUS, Change from same quarter previous year
Between the March quarters of 2004 and 2005, Western Australia's trade position improved with several major trading partners. Most notably, the state's trade surplus with Thailand increased from $91 million to $547 million, largely due to increases in the value of exports of non-monetary gold and petroleum. The state's trade surplus with China also improved considerably over the period, increasing from $847 million to $1,239 million, largely due to an increase in the value of iron ore exports, aided by a rise in iron ore contract prices. Conversely, decreases in the value of exports of non-monetary gold to the Republic of Korea and India contributed to declines in the state's trade surpluses with those countries, down by $274 million and $214 million respectively.
The value of Western Australia's exports rose by 13.8% to $9,047 million in the March Quarter 2005, compared to the same quarter of 2004. Over the period, the value of exports of Metalliferous ores and metal scrap increased by $527 million (38.4%), mainly due to an increase in the volume of iron ore exports (up 15.1%), associated with the expansion of several iron ore mines. The value of exports of Petroleum, petroleum products and related materials rose by $338 million (34.3%), largely driven by an increase in the value of crude petroleum oil exports (up 31.9%), reflecting high international oil prices. Exports of Natural and manufactured gas increased by $300 million (50.4%) - comprised almost entirely of natural gas exports - coinciding with the commencement of exports from the 4th LNG train on the North West Shelf in late 2004.
Offsetting the state's export growth over the period was a decrease in the value of exports of Iron and steel - down $60 million (84.2%), due to the cessation of pig iron exports from Western Australia in mid-2004.
The value of imports to Western Australia rose by 16.7% to $3,476 million in the March Quarter 2005, compared to the same quarter of 2004. Recent growth in imports has been fuelled by rising investment activity in the state's resources sector, as well as high levels of consumer and business sentiment. The main commodities contributing to the rise in the value of the state's imports over the period were: Petroleum, petroleum products and related materials, up $119 million (26.5%), solely driven by higher oil prices with petroleum imports declining by 2.9% in volume terms; and Power generating machinery and equipment, up $71 million (85.2%).
Mineral and petroleum exploration expenditure
Expenditure on mineral exploration (trend) continues to grow in Western Australia, rising by 4.7% ($7 million) in the March Quarter 2005, following increases of 8.2% (September) and 6.4% (December) in the previous two quarters. Growth in exploration has been supported by strong international demand for minerals throughout 2004-05. Mineral exploration expenditure totalled $157 million in the March quarter, the highest level since the June Quarter 1998 ($161 million). Expenditure has now increased for twelve consecutive quarters, the longest period of growth since the last major upturn between the June Quarter 1992 and March Quarter 1995 (12 quarters).
MINERAL EXPLORATION EXPENDITURE, Total minerals
In original terms, Western Australia's mineral exploration expenditure totalled $134 million in the March Quarter 2005 - $38 million (39.3%) higher than in the same quarter of 2004. Over the period, growth was driven by expenditure on Nickel and cobalt exploration, up $27 million (186.0%), supported by growth in the price of nickel and strong demand from China's stainless steel producers. Detracting from growth was a fall of $5 million (8.8%) in expenditure on Gold exploration.
Expenditure on petroleum exploration (original) in Western Australia totalled $154 million in the March Quarter 2005 - $47 million (44.3%) higher than in the same quarter of the previous year.
Minerals to record increases in production volumes between the March quarters of 2004 and 2005, were Diamonds (up 139.0%), Iron ore (up 18.2%) and Gold (up 9.8%). A decrease was recorded in the production of Zinc (down 23.5%).
Short-term arrivals on holiday
A record number of 69,099 overseas visitors arrived in Western Australia by air on holiday in the three months to March 2005 - 14,556 (26.7%) more than in the same period of 2004. Visitor arrivals increased from most of the selected countries, including Singapore (up 4,947 or 83.5%), the United Kingdom and Ireland (up 2,568 or 14.1%) and the rest of Europe (up 1,330 or 17.6%). The only fall in visitor arrivals was recorded from Thailand (down 328 or 24.8%).
SHORT-TERM VISITOR ARRIVALS AND RESIDENT DEPARTURES OVERSEAS, By air on holiday
Short-term departures on holiday
The number of Western Australian residents departing by air on holiday increased to 56,916 in the three months to March 2005 - 6,062 (11.9%) more than in the same period of 2004. The rise in the number of resident departures coincided with a fall in the price of overseas holiday travel and accommodation over the period. Resident departures increased to Singapore (up 3,013 or 78.4%), New Zealand (up 1,307 or 21.0%) and Hong Kong (up 1,223 or 364.0%). Partly offsetting the rise were decreases in resident departures to Thailand (down 599 or 15.0%), continental Europe (down 455 or 29.2%) and the United States of America (down 452 or 22.7%). The Indian Ocean earthquake and tsunami in December 2004 have impacted on travel between Western Australia and Thailand.
Western Australia's labour market continued its strong performance over the three months to May 2005, with the trend estimate of employed persons increasing by 18,900 or 1.8% - well above the national increase of 0.8%. So far in 2005, employment in Western Australia has grown at twice the rate of 2004 - 0.6% per month compared to 0.3%. The number of persons employed full-time rose by 13,403 (1.8%) over the three months to May 2005, driven by increases in both males and females. Monthly growth in the state's full-time employment has averaged 0.8% (5,400 persons) since November 2004, compared to 0.3% nationally.
EMPLOYED PERSONS, Total
The Construction industry in Western Australia recorded the largest increase in employment between May 2004 and May 2005, rising by 19,644 (24.4%). Other industries to record strong growth over the period were Property and business services (up 14,422 or 13.2%) and Government administration and defence (up 10,279 or 28.1%). Industries that recorded decreases in employment over the period included Wholesale trade (down 10,703 or 20.4%) and Personal and other services (down 7,496 or 16.4%).
The number of unemployed persons (trend) in Western Australia increased by 1,812 or 3.6% over the three months to May 2005 - three times the national increase (1.2%). Much of the recent growth in unemployment can be attributed to West Australians entering the labour market, with the state's labour force rising by 20,600 persons and the participation rate increasing from 67.0% to 68.1% between February and May 2005. Unemployed females accounted for most (72.2%) of the rise in unemployed persons during the period.
The rise in the number of unemployed persons in Western Australia has seen the state's unemployment rate increase slightly, from 4.7% in February 2005 to 4.8% in May 2005. Nationally, the unemployment rate remained unchanged at 5.1%.