WA Economic Profile for September 2016

Western Australia is the main minerals and petroleum exporting state of Australia and its economy benefits from its proximity to the growing markets of Asia.

Western Australia experienced unprecedented business investment growth over the past decade in response to rising commodity prices and demand from China, Japan and other Asian countries. More recently, the economy has entered a new stage of development. While merchandise export values have fallen due to falling commodity prices, merchandise export volumes are continuing to grow, as production increases from the new capacity created by the investments of the past few years. This trend is likely to continue in the near term, with merchandise export volumes offsetting falling business investment.

However, the Western Australian economy is in transition to a period of lower growth. As this transition unfolds, economic activity will broaden into other sectors of the economy. The competitiveness of agriculture, manufacturing, tourism, education and other services exports are no longer constrained by a high Australian dollar as at the height of the resources expansion. Businesses will also benefit from increased availability of labour and lower input costs. The major mining projects developed over the past decade bring large, ongoing operating and capital expenditures to sustain their operations, creating opportunities for mining services, manufacturing and transport industries and higher operational mining employment. Western Australia’s extraordinary expansion is unwinding and the economy is returning to historically more typical conditions.

Main updates this month

Business investment

• Western Australia’s real business investment fell 19% in 2015‑16.

• Western Australia’s nominal business investment fell 18% to $51.6 billion in 2015-16.

• Western Australia’s mining new capital expenditure fell 23% to $35.2 billion in 2015-16.

Exports

Western Australia’s real merchandise exports rose 6% in 2015‑16

Population

Western Australia’s population was 2.61 million in the March quarter 2016, 11% of the national population.

Labour market

• Western Australia’s employment fell by 6,600 to 1.34 million in August 2016.

• Western Australia’s unemployment rate was 6.3% in August 2016, unchanged from the previous month, but above the 6.0% a year ago.

Commodity prices

In August 2016, the monthly average price of:

o   iron ore rose 7% to US$61.0 a tonne

o   LNG was US$6.3 a million British thermal unit

o   crude oil rose 0.2% to US$44.8 a barrel

o   gold rose 0.3% to US$1,340 an ounce

The Reserve Bank of Australia’s monthly index of rural commodity prices fell 3% in August 2016.

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