Growth, inflation and labour market all easing
The divergence between mining and non-mining state economies continues, although with mining investment now winding down it is the major non-mining economies that are starting to outperform. Budget positions improving but focus remains on reducing expenditure.
The divergence between mining and non-mining state economies continues, although with mining investment now winding down it is the major non-mining economies that are starting to outperform. Although strong export performance in the mining states – as mining projects become operational – is contributing to Gross State Production (GSP) in the mining states, the rebalancing back towards the non-mining states has become apparent in domestic demand.
Over 2014, real state final demand (SFD) growth was strongest in NSW and Victoria, while WA and Queensland were in decline. Strong performance in residential property markets and better consumption contributed to the outcome, although both retail sales and property prices have lost some momentum more recently. Nevertheless, higher housing prices, low interest rates and an undersupply has encouraged a surge of residential construction approvals that should contribute notably to growth this year – particularly in NSW and Victoria.
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