The WA economy is poised to pick up pace on the back of an increasingly confident household sector that is loosening its purse strings.
The State Chamber of Commerce and Industry, in a report into the WA economy to be released today, has upgraded its forecasts for economic growth in large part because of the lift in confidence among consumers and parts of the business sector.
Not only is the chamber expecting the economy to grow quicker than the State Treasury forecast in last month’s Budget, it also believes wages will lift faster than predicted.
Chamber chief economist Rick Newnham said confidence levels among consumers and businesses had returned to their highest levels since the tail end of the mining boom.
He said household consumption, which accounts for more than half of domestic economic activity in WA, was growing at its fastest rate since 2014. “This growth has been driven by household consumption, which has found renewed strength this year, continued export growth and stable business investment,” Mr Newnham said.
“Cost-of-living pressures and household budget constraints still remain but discretionary spending is showing signs of life again, particularly on hotels, cafes and restaurants and recreation and culture.”
The only area of weakness is the jobs market, with unemployment still above 6 per cent.
Mr Newnham said this was partly driven by an increase in the number of people looking for work, suggesting there was growing confidence in households that work could be found in the future.
The chamber’s views were backed by the latest NAB business survey, released yesterday, which showed business conditions in WA at their best level in more than four years.
The lift in trading conditions is being driven by the mining sector which, on the back of strong prices, continued to improve through the past month.
The overall improvement will go some way to mitigating a fall in the housing sector, with the Bureau of Statistics reporting a 1.1 per cent fall in home loans issued across the country through April.
Loan numbers have fallen sharply since the middle of last year and are down almost 10 per cent in WA.
The size of the average loan for the purchase of a new dwelling has has hit a record $418,000.