Queensland Gross State Product; growth eases as households slow down

Posted on March 6, 2018 by Pete Faulkner - GDP, QLD, State Accounts, Uncategorized

The release by Queensland Treasury of the State Accounts for the third quarter of 2017 appear to have slipped largely under the radar. While the ABS produce Gross State Product (GSP) data only on an annual basis for the June quarter, the QLD Treasury produce quarterly estimates. We have previously seen some disparity in these two measures, and again the latest QLD data for the second and third quarters of 2017 appears to be rather more positive than the second quarter data from the ABS (e.g. ABS data had annual GSP growth at +1.8% while the latest Treasury data has it at +2.5%). Past experience would suggest that we may well see the ABS data revised to close some of that apparent gap.

The most recent Treasury data shows GSP growth falling to +2.4% for the third quarter, its slowest pace since the end of 2015. However, it also shows that the State has now recorded annual growth above 2% for the 7th consecutive quarter after over a year of sub-2% growth previously.

When we consider the breakdown of the data we see that it is household consumption that is responsible for some of the slowdown. Household consumption (the largest component of GSP) growth fell to +2.7% annually in the third quarter, its slowest pace since the middle of 2015. Nevertheless a significant recovery in private investment (+2.6% for the year and only the second quarter of positive growth after 3 years of falls) saw Gross State Expenditure (which is the domestic side of the State economy, without exports) grow by 0.5% for the quarter and is up 2.8% annually which is its fastest pace of growth in more than 4 years. (The ABS quarterly State Final Demand figures support this data and also show growth of 2.8%).

When we consider the net exports picture we see the real reason for the slowdown in GSP. Net exports fell by 19.6% for the year to Sept 2017; partly impacted by the issues caused when Cyclone Debbie swept through the State in late March.