Today saw the release by Queensland Treasury of the State Accounts for the first quarter of 2019. As we noted last quarter, this data gets precious little coverage and yet is, in our opinion, a very useful indicator of how the State economy has been performing. While the ABS produce Gross State Product (GSP) data only on an annual basis at the June quarter (which will likely not be availabe until November), the QLD Treasury produce quarterly Trend estimates (albeit rather delayed). We have previously seen some disparity in these two measures, although past experience, and the chart below, would suggest that these differences often get revised away on subsequent releases.
The Treasury data shows Gross State Product lifted 0.4% q/q in the fourth quarter for a year-on-year increase of just 1.9%; this is a sharp slowdown from the previous two quarters when we saw growth at 3.5% (Q3) and 2.5% (Q4).
Gross State Expenditure-GSE-(which ignores the external account) was up 0.4% on a quarterly basis for a 1.1% y/y increase (ABS estimates of State Final Demand were +0.4% q/q and +1.3% y/y). The drag on growth was a slowing of government consumption (up just 2.5% y/y, down from 3.0% in the previous quarter) and a sharp decline in Private Investment (-6.0% y/y). Offsetting some of this weakness was Public Investment which increased 13.3% y/y; however, Public Investment is only 1/4 of the size of Private Investment.
Once we add the external account we see net exports added to Gross State Product growth to bring the rate to 1.9% y/y (although this is well down on the 2.5% rate in Q4).
Given the commentary around a ‘per-capita recession’ at a national level, it is interesting that (based on an extrapolated estimate of Queensland population) we see a very small (0.02%) fall in this quarter for per-capita GSP in Queensland. Were this to be repeated in the second quarter then Queensland too would be in a ‘per-capita recession’…time will tell.