Has Qld’s economy run out of puff or are we just having a breather?
While Australia’s economy is booming, Queensland appears to be falling behind after a wild end to 2020, but the figures don’t always tell the full story.
Shoppers spent less in the lead-up to Christmas and more at Black Friday sales (file image)
Queensland’s domestic economy grew by just 0.4 per cent for the March quarter. That excludes the state’s exports, which is the engine of the Queensland economy, but even so the rest of the states grew by 1.6 per cent on average.
The issue for Queensland is one of confidence and relative industry performance, according to the Chamber of Commerce and Industry Queensland’s economist Jack Baxter.
He said unlike the rest of Australia, Queensland experienced two, three-day hotspot closures in the March quarter, which impacted business and consumer confidence.
“At the time, Queensland businesses expressed concern that the State Government seemed unwilling to support businesses despite the latest closure representing the first in Australia following the conclusion of stimulus support measures such as JobKeeper
“Consequently, household and business confidence was hit once again, momentarily slowing the momentum of economic recovery.”
He said among the data was the fact that household consumption sank $157 million.
Queensland’s economic growth performance was also being compromised by declining business capital investment, according to Adept Economics’ Gene Tunny.
Tunny said non-dwelling building investment and heavy/engineering construction investment were falling and being offset by the property boom which poured money into the pockets of real estate agencies and the State Government’s treasury.
Mining sector capital investment has also been increasing in WA but falling in Queensland which Tunny said was a reflection of the iron ore demand in WA and the depressed coking coal prices in Queensland.
Retail trade in April also looked dire. NSW, Victoria and the ACT all had retail trade growth above 1.5 per cent. In Queensland it was a dismal 0.3 per cent.
But everything is relative. This time last year Queensland’s retail trade was down 15 per cent then bounced back the next month by 16 per cent.
We were at least ahead of the Northern Territory and particularly WA, where the retail trade went negative and looks to be in a real hole.
Conus Consultancy economist Pete Faulkner said that growth in the state final demand (the domestic economy) in recent years had been coming from the public sector and the final two quarters of last financial year had not changed that.
But he said Queensland was not running out of puff.
There had been some wild swings in the data and Queensland was already at an extreme stimulus-induced high at the end of last year. A pull back from those levels was hardly a surprise, he said.
“On a year-on-year basis, Queensland household consumption is up 3.3 per cent which is the fastest pace since the second quarter of 2012 and private capital expenditure is up 2.5 per cent, the fastest pace since the second quarter of 2018.
“So on those numbers it’s hard to argue that Queensland’s private sector has run out of steam. We didn’t fall as far, bounced further up and the private sector is growing at its fastest pace in three years.”
The national export figures also look promising. Australia produced a trade surplus of $8 billion in April and ANZ said there had been a surge in coal and LNG, both to which Queensland has exposure.