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In seasonally adjusted chain volume terms, State Final Demand increased by 2.9% ($589 million) in the June quarter 2004. The major drivers of growth during the quarter were:
The main detractors from growth in State Final Demand, during the June quarter 2004, were:
Consumer Price Index
Perth's Consumer Price Index increased by 1.0% in the June quarter 2004, compared to 0.5% increase nationally. Prices increased in Perth across all broad expenditure groups, during the period, with the major contributors being:
Partially off-setting the rise in Perth's CPI, over the June quarter 2004, were price decreases in a number of expenditure classes including:
Perth's CPI increased over the twelve months to June 2004 by 2.6%, compared to 2.5% nationally. The major contributors to prices growth in Perth during this period were housing, transportation and food.
Nationally, annual growth in the CPI remained well within the Reserve Bank of Australia's (RBA) target range. In the near term, the RBA expects inflation to be held down by the ongoing effects of the 2002-03 exchange rate appreciation. However, financial market economists have cautioned that continued rapid growth in credit, strengthening of international economic conditions, and rising oil prices may all impact on the longer term
Wage cost index
Wages continued to grow at a moderate rate in Western Australia, during the June quarter 2004, with the state's quarterly index of total hourly rates of pay excluding bonuses increasing by 0.5%. Nationally, the wage cost index also increased by 0.5% over the period.
In the 12 months to June 2004, Western Australia recorded the lowest wages growth of all states and territories of 3.1%, compared to national growth of 3.5%. The Australian Capital Territory recorded the highest annual growth of 4.2%.
Of the selected industries, Education recorded the highest quarterly growth of 1.0% in the June quarter 2004, while Manufacturing recorded the highest annual growth of 3.7%. Wages remained unchanged for Government administration and defence during the June quarter. The lowest annual increase in wages was recorded by Retail trade (2.2%).
Managers and administrators, Professionals, and Intermediate clerical, sales and service workers all recorded wages growth of 0.6% in the June quarter 2004. The highest annual growth in wages of 3.4% was recorded by Intermediate clerical, sales and service workers. Labourers and related workers had the lowest quarterly wages growth of 0.2%, while Managers and administrators had the lowest annual increase at 2.3%.
New motor vehicle sales
New motor vehicle sales in Western Australia (trend) increased for the eighth consecutive month in August 2004 (up 0.8%), aided by the declining cost of imported vehicles, low interest rates and strong labour market conditions. Since the beginning of 2004, new motor vehicle sales have risen in the state by an average of 0.7% (about 49 vehicles) per month, compared to 0.1% nationally.
Much of the recent growth in Western Australia's new motor vehicle sales (trend) has been in Sports utility vehicles (SUVs). In the three months to August, new SUV sales increased by an average of 2.5% (about 35 vehicles) per month. SUVs accounted for more than half (52.1%) of the increase in new motor vehicles sold during the period, with the remainder split across Passenger and Other vehicles (27.3% and 20.8% respectively).
Retail trade Retail turnover in Western Australia (trend) increased sharply in the three months to July 2004, rising by 2.9% from the previous three month period, and compared to a national increase of 1.6%. Underpinning the state's rapid growth in retail spending were strong labour market conditions and solid gains in household wealth. It is also likely that spending patterns were influenced, over the period, by the Federal Government's Family Tax Benefits package and personal income tax cuts which took effect from July 2004.
The main contributors to retail turnover growth, over the three months to July 2004, were spending on: Food, up $60.9 million (3.0%); Household goods, up $40.0 million (5.2%); and Hospitality and services, up $18.1 million (3.9%). Going against the trend, however, were small decreases in spending on: Recreational goods, down $5.2 million (2.1%); and Clothing and soft goods, down $2.3 million (0.9%).
In trend chain volume terms, Western Australia's retail turnover for the July quarter 2004 increased by 1.6% to $4,648.6 million - slightly above the national increase of 1.3%.
FINANCE AND INVESTMENT
Private new capital expenditure
Business investment in Western Australia (trend chain volume terms) fell by 1.9% to $2,278 million in the June quarter 2004. This was the second consecutive quarter of decline, following an extended period of growth dating back to the March quarter 2002. Driving the June quarter decrease in business investment was a 4.0% ($56 million) drop in expenditure on Equipment, plant and machinery. However, there was some offsetting growth in new capital expenditure on Buildings and structures over the period (up 1.1% or $10 million).
Despite recent easing, Western Australia recorded an increase in business investment of 9.8% over the year to June 2004. This was the second highest increase of all states and territories (behind growth of 10.6% in New South Wales) and was double the national average of 4.9%.
In original current price terms, business investment in Western Australia in the June quarter 2004 was $2,311 million - up 11.5% ($238 million) on the corresponding quarter of the previous year. Contributing to growth in business investment during this period, was the commencement of a number of major construction projects, including the Mutineer Exeter oil well development, the Alcoa Pinjarra alumina refinery expansion and the Dampier Port upgrade. This was reflected in a 25.4% ($157 million) increase in business investment by Selected other industries (including Construction, Retail trade and Property and business services) and a 6.2% ($71 million) increase in investment by the Mining industry. Also contributing to growth in business investment, over the quarter, was a 3.3%
increase in new capital expenditure by the Manufacturing industry (up $10 million).
According to the Western Australian Department of Treasury and Finance, business investment in Western Australia is expected to be maintained at existing levels for the coming year. The completion of a number of projects will be balanced against the continuation of existing projects as well as new investment, such as the Woodside development of Enfield oil, and BHP-Billiton development of the Ravensthorpe nickel mine. The long term outlook for business investment in Western Australia remains positive.
Housing finance commitments
The number of housing finance commitments (trend) in Western Australia fell by 0.3% during July 2004. While this was the ninth consecutive monthly decrease in housing finance commitments, the rate of decline appears to be slowing. The average monthly decrease in housing finance dropped to 0.8% in the three months to July 2004, from an average of 2.2% in the preceding three month period. Helping to arrest the decline in housing finance commitments in Western Australia, particularly among first home buyers, were reductions in stamp duty rates which took effect from 1 July 2004.
Despite the continued decline in number of commitments, the total value of housing finance commitments in Western Australia increased for the fourth consecutive month in July 2004. The rise for the three months ending July was 1.5% ($45.4 million) over the previous three month period. In original terms, there were 9.4% fewer housing finance commitments in Western Australia, in the three months to July 2004, than there were in the corresponding period of 2003. This represented a fall from the record high levels of housing finance recorded during the middle of 2003. Over the period, the number of new housing finance
commitments dropped for both first and non-first home buyers (down 8.9% and 9.5% respectively).
While the number of housing finance commitments was lower in the three months to July 2004, compared to the same period in 2003, the average borrowing size was up 8.0% to $159,500. Over this period, the average borrowing size increased by 10.3% for first home buyers (to $156,500) and by 7.6% for non-first home buyers (to $160,000).
New house approvals in Western Australia grew by 8.9% (402) over the three months to July, compared to the previous three months. Driving the state's increased housing activity was a strong rebound in approvals in May (up 33.7%), following a large seasonal decline in April (down 25.2%). More recent data, however, suggest an easing in the Western Australian housing market with the number of new house approvals dropping in both June (down 8.7%) and July (down 0.9%).
In current price terms, the total value of new houses approved in Western Australia increased by 13.7% ($96.4 million) to $799.8 million in the three months to July 2004, compared to the previous three month period. Nationally, the total value of new houses approved increased by 2.6%. Over the same period, the value of non-residential building approvals in Western Australia increased by 52.2% ($150.6 million) to $439.2 million, due to the approval of large health, accommodation and office projects.
Western Australia recorded a trade surplus of $5,377.5 million in the June quarter 2004 - $254.3 million (5.0%) higher than in the corresponding quarter of 2003. Both exports and imports grew over the period, with growth in exports (up $379.9 million) outstripping growth in imports (up $125.6 million).
Between the June quarters of 2003 and 2004, the state's trade position improved with a number of major trading partners. Most significantly, Western Australia's trade surplus with India increased by $642.4 million to $876.1 million; and the trade position with Indonesia moved from a deficit of $185.5 million to a surplus of $43.1 million. In contrast, surplus on the state's trade with the United Kingdom dropped, during the period, by $728.8 million to $116.9 million.
Western Australia's trade surplus for 2003–04 was $20,515 million – 0.8% less than in the previous financial year, partly due to the adverse effects of the strong $A. Contributing to this decline was a 0.7% decrease in the value of merchandise exports and a 0.6% decrease in the value of merchandise imports.
Western Australia's strong export performance in the June Quarter 2004 was largely a consequence of demand for the state's resources, and the continued rebound in agricultural exports following the 2002 drought. Between the June Quarters of 2003 and 2004, exports of Combined confidential items (including alumina, nickel, mineral sands and some agricultural products) increased by $279.1 million (19.4%), while exports of Cereals and cereal preparations grew by $260.2 million (71.0%).
Offsetting the state's export growth during this period was a large decrease in the value of exports of Petroleum, petroleum products and related materials - down $217.6 million (19.8%) - a consequence of maintenance work on one of the state's petroleum production sites, declining production from some maturing oil fields and an increase in domestic sales. The value of exports of Transport equipment (excluding road vehicles) and Gas, natural and manufactured also declined considerably over the period (down $147.9 million or 95.6%, and $105.4 million or 14.2%, respectively).
Growth in Western Australia's merchandise imports during the June Quarter 2004, compared to the same period a year earlier, was largely driven by increases in the value of imports of Road vehicles (up $51.3 million or 13.9%) and of Petroleum, petroleum products and related materials (up $48.6 million or 11.9%).
Mineral and petroleum exploration
Mineral exploration expenditure (trend) in Western Australia rose by 6.9% (or $8.2 million) in the June quarter 2004 - the ninth consecutive quarterly increase. Over 2003–04, expenditure on mineral exploration increased at an average rate of 4.5% per quarter, compared to 3.1% over 2002-03.
In original terms, Western Australia's mineral exploration expenditure was $138.8 million in the June quarter 2004 - $27.2 million (24.4%) higher than in the June quarter 2003. Accounting for much of this was a $15.8 million (23.5%) increase in expenditure on Gold exploration, in response to strong growth in the price of gold throughout 2003–04. Expenditure on Nickel and cobalt exploration also grew strongly over the period (up $5.7 million or 32.2%) due to strong international demand, particularly from China, and declining international stocks.
Petroleum exploration expenditure (original) was $197.5 million in the June quarter 2004 - $46.2 million (30.5%) more than in the corresponding period of 2003. The increase in expenditure on Petroleum exploration coincided with rising world oil prices, as a result of diminishing stocks in the US, the threat of terrorists attacks on oil supplies, and strong demand from China and other expanding Asian economies.
Minerals to record increases in production in the June quarter 2004, compared to the June quarter 2003 were: Iron ore (up 10.2%) and Salt (up 8.2%). Decreases were recorded in the production of Zinc (down 86.7%) and Diamonds (down 55.7%).
Short term arrivals on holiday
There were 45,047 overseas visitor arrivals by air on holiday to Western Australia in the three months to June 2004 - 4,489 (11.1%) more than in the corresponding period of 2003. The strong growth in arrivals, over this period, reflected the significant impact that world events had on travel to Australia during 2003. The largest increases in visitor arrivals were from Malaysia (up 2,645 or 59.1%), Japan (up 1,829 or 54.4%) and Thailand (up 1,047 or 111.1%). Partially offsetting these increases, however, were falls in the number of visitors from Singapore (down 1,311 or 12.8%) and Indonesia (down 929 or 32.4%).
In 2003-04, a total of 231,194 overseas visitors arrived by air on holiday to Western Australia - up 13,231 (6.1%) on the number of arrivals in 2002-03. The rebound in tourism to Western Australia during 2003–04 was largely a consequence of renewed confidence in overseas travel, following a period of sustained global uncertainty, and was aided by the staging of the Rugby World Cup in Australia in late 2003.
Short term departures on holiday
In the three months to June 2004, 67,462 Western Australian residents departed overseas by air on holiday - up 32,144 (91.0%) on the number of departures over the same period in 2003. The growth in departures was largely a consequence of holiday travel to Indonesia returning to a more normal level (up 13,047 or 130.8%) following the Bali bombings. There were also significant increases in departures to a range of other countries, including Singapore (up 3071 or 433.1%) and the United Kingdom and Ireland (up 2,712 or 51.9%).
Over 2003-04, there were 225,882 short-term resident departures overseas by air on holiday from Western Australia - 47,737 (26.8%) more than in the previous year. Growth in resident departures in 2003-04 was aided by a strong $A and widespread travel discounting in 2004.
After nine months of sustained growth, the trend estimate of employed persons in Western Australia levelled out in the three months to August - dropping by 0.4% or 4,300. The fall in employment was driven solely by a 1.8% decrease in the number of persons employed part-time (down 5,200). In contrast, the number of persons employed full-time continued to grow, increasing by 0.1% or 900 over the period. Nationally, the trend estimate of employed persons increased by 0.1% over the same period.
In original terms, the Wholesale trade industry recorded the largest increase in number of employed persons in August 2004, compared to the corresponding period of 2003 - rising by 8,100 or 18.9%. Other industries to record strong growth, over the period, were Personal and other services (up 6,500 or 16.2%) and Mining (up 6,300 or 20.7%). Agriculture, forestry and fishing recorded the largest decrease in number of employed persons (down 6,300 or 12.7%) followed by Education (down 6,100 or 8.2%).
Despite an easing in employment growth, the trend estimate of unemployed persons in Western Australia fell by 5.4% (2,900) over the three months to August 2004. The state's unemployment rate (trend) declined slightly over the period, falling from 5.1% in May to 4.9% in August (the lowest rate recorded since the series began in 1978), extending a general downward trend dating back to November 2003. Nationally the unemployment rate was unchanged in August at 5.6%.
Western Australia's strong labour market conditions in 2004 have coincided with a large reduction in the state's long term unemployment. In August 2004, 7,600 Western Australians had been unemployed for 52 weeks or more since their last employment - 45.4% or 6,300 less than a year earlier.
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