Overview:

• After three years of very high growth fuelled by the resource construction boom, the past three years have seen the WA economy underperform. WA’s Gross State Product contracted by 2.7% in 2016-17.
• This week, we report on conditions on the ground in the West after a trip there last week. The signs are very encouraging.
• The worst now seems to be behind the WA economy if the mining and resources sector is any guide. The sector is now again spending and hiring both to maintain (and enhance) production with companies also responding to an increased appetite for new growth in both traditional and non-traditional/emerging sectors.
• Iron ore production is now near intended annual production guidance limits. (Some further material lift could follow but only if market conditions lift further.) Gold, base metals, lithium, cobalt, and rare earths are all sectors of current interest. Investor interest is also seen with more IPOs coming to market with the re-emergence of junior explorers.
• The WA labour market is already showing signs of turning. SEEK Job Ads have been rising for a year with trend employment now stabilising. In some sectors there are even emerging signs of selective shortages.
• Property markets generally remain soft, over-supplied, though there are signs of improvement at the higher end of both the commercial and residential property markets.
• Markets this week will be paying close attention to Australia’s September quarter growth, 0.7%/2.9% expected. Annual growth is set to jump from 1.8% to 2.9% courtesy of Q3 growth and base effects as a growth contraction last September quarter drops out. Tomorrow’s RBA Board is expected to leave rates on hold, express confidence in the growth outlook and continue signaling no near term rush to move. Retail sales in October (Thursday) are likely to have risen 0.3% after a weak Q3.
• Offshore, US tax reform remains in focus with the Senate and the House having now passed bills, though differences now need to be reconciled before it can become law. US Non-farm payrolls are out Friday, focus especially on wage earnings.

For full analysis, download the report:

• Australian Markets Weekly: 4 December 2017 (PDF, 401kb)

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