WA’s economy bounces back after the barren years
FORGET green shoots, all the signs indicate WA — the nation’s former economic engine room — is finally beginning to flourish once again after four barren years.
The State has added 20,000 jobs since the start of the year, both rents and house prices are holding steady after more than two years of decline and cashed-up shoppers are flocking back to the CBD in time for Christmas.
New car sales spiked 11.6 per cent year-on-year in October, making WA the most improved market for motor vehicles in the country.
Engineers are back in high demand as mining exploration ramps up and the State Government begins breaking earth on a series of major infrastructure projects headlined by Metronet.
Speak to anyone from the Treasurer to John Hughes and the message is clear: the days of doom and gloom are in the rear view mirror.
“I am very positive about the State of the WA economy in years ahead and I certainly think that we have been through the worst of the downturn,” Treasurer Ben Wyatt said.
“We are starting to see early signs of improvement, particularly around unemployment and consumer confidence, and I expect that this will continue throughout 2018.”
Improved commodity prices and an appetite for exploration have helped revive a resources sector that suddenly finds itself starved of workers, leading to a massive 64.4 per cent surge in engineering vacancies in the 12 months to September, according to Engineers Australia.
A separate report, prepared by DFP Recruitment Services, found overall mining job vacancies were up 24.9 per cent year-on-year in October.
Gold, liquefied natural gas and iron ore sales all rose in 2016-17 and Minister for Mines and Petroleum Bill Johnston said WA’s mineral industry was in its best shape since 2012.
“There has been a surge of investor interest in gold and battery metals, such as lithium, graphite and cobalt, which are key ingredients for electric vehicles,” he said. “These hot commodities are helping WA emerge more rapidly from the past economic doldrums.
“WA is already on track to be the world’s biggest producer of lithium and demand continues to grow, I expect this will create more jobs for West Australians.”
The much-maligned local property market is beginning to exhibit signs of life with sales up 9 per cent in October according to the Real Estate Institute of WA.
CoreLogic data backs that trend with median house prices remaining static for two consecutive months — a result of increased activity at the higher end of the market, according to REIWA president Hayden Groves.
“I think we will look back at 2017 as the year that the market bottomed out,” he said.
The City of Perth reported a 4.5 per cent increase in visitors last month compared with October 2016 and the Australian Retailers Association (ARA) is predicting a $50 million surge in retail spend this festive season to $5.4 billion.
ARA executive director Russell Zimmerman said NSW and Victoria were reaping the benefits of extensive infrastructure projects and he believed the same economic rewards were on their way west.
“Any time there is big government spend on infrastructure some of that money inevitably flows on to the retail sector,” he said.
“My gut feel says WA will continue its return to better retail figures in 2018.”
Veteran car dealer John Hughes said the industry was coming off a very low base but that he had no doubt things were starting to improve.
Chamber of Commerce and Industry WA chief executive Deidre Willmott said the mining construction downturn was coming to an end and that businesses and consumers were optimistic heading into 2018.
“We know that consumer confidence in WA is continuing its upward streak, reaching a three-year high in the September quarter, which is an encouraging sign of economic activity and growth to come in WA,” she said.
“This trend increase combined with 20,000 more people in work now than at the start of the year means businesses are more confident about the economy and putting on more staff — a markedly different feeling to this time last year.”
WEST Australians enjoying new found buying power are benefiting from motor vehicle margins that remain near historic lows, according to veteran Perth dealer John Hughes.
With bargains on offer, new car sales surged 11.6 per cent year on year in October – making WA by far the most improved market in Australia according to Federal Chamber of Automotive Industries data.
That spike was fuelled mainly by a big jump in small car purchases (up 23.1 per cent) and heavier commercial vehicles including vans, buses and pick-up trucks (32 per cent).
“I’ve never seen the market more competitive in 62 years of business, margins are razor sharp,” Mr Hughes said.
“We’ve been at the bottom for quite a while not but there are definitely signs that things are picking up.
“New car sales are down 30 per cent from the height of the mining boom but I’m hoping to pick up a third of that next year and in two to three years get back to where we should be.”
PERTH’S embattled property market is showing signs the malaise is lifting with sales on the rise and the median house price stabilising.
After more than two years of declines, figures from property research firm CoreLogic reveal house prices have held steady since August. At the same time, Real Estate Institute of WA data shows sales transactions spiking 9 per cent in October, with trade-up buyers particularly active, according to REIWA president Hayden Groves.
“We’re starting to see a lot more sales of higher- value properties in sought-after suburbs like Nedlands and Cottesloe,” he said. “Listings in the western suburbs are well down relative to housing stock, and any good-quality family homes that come on the market in those precincts are getting multiple offers.”
Mr Groves said a healthy trade-up sector would put upward pressure on the median house price and encourage potential buyers to act sooner rather than later. “When people see house values beginning to rise they make the decision that now is the time to buy,” he said.
The median cost of renting has remained stable at $350 a week for six months, with available stock down 12 per cent since July. In the Perth CBD, commercial vacancy rates fell in July for the first time in five years, according to the Property Council Australia.
WEST Aussies are predicted to shell out an extra $50 million for presents this year as consumer confidence creeps back in time for Christmas.
The Australian Retailers Association (ARA) is tipping WA’s festive spend to top $5.4 billion this year. ARA executive director Russell Zimmerman said there was a buoyancy in WA since the change of government that had helped jolt the State out of a long slump in retail sales.
“Between January and September WA has recorded a 0.5 per cent increase compared to the year before,” he said. “That’s promising because if you go back a couple years we were seeing month after month of WA in flat or negative territory.”
Chamber of Commerce and Industry WA chief executive Deidre Willmott said consumer confidence reached a three-year high in the September quarter.
“A forecast rise in Christmas spending for WA will be welcome news for our retailers who have been hit hard in recent years,” she said.
CHRISTMAS has come early for job hunters with increased vacancies across nearly the entire WA economy.
Listings for 24 of the 29 industries on employment website SEEK grew in October compared with the same time last year, with overall job advertisements up 19.2 per cent.
SEEK Australia and New Zealand managing director Michael llczynski said WA had recorded the third-biggest growth in job ads across Australia in October.
Automotive trades, mining engineers, aged-care nurses and warehouse workers were the hottest commodities in a WA job market that bottomed out in mid-2016 and has been rallying ever since.
According to Engineers Australia, engineering vacancies grew to 587 in September, a 64.4 per cent increase from 12 months ago.
Engineers Australia WA general manager Susan Kreemer Pickford said Metronet and other associated transport infrastructure projects were driving demand for civil engineers while resource exploration was picking up after the State Government’s decision to renew the Exploration Incentive Scheme.
Chamber of Minerals and Energy WA manager people and communities Susan Cull said major miners BHP, Rio Tinto and Woodside had all committed to increasing their intake of apprentices and trainees in 2018.