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Queensland Economic Advocacy Solutions

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Queensland's domestic economic growth by the numbers

Latest data from the Australian Bureau of Statistics reveals Queensland's domestic economy is tracking relatively well although growth continues to lag other States. QEAS takes look at this important indicator.

​When gauging the overall performance of the Queensland economy there are two indicators that can be used.  One is the annual ABS Catalogue 5220.0 that measures 'Gross State Product' (GSP) and the other is ABS's quarterly catalogue 5206.0 that measures State Final Demand (SFD).  In short SFD measures household consumption expenditure, government consumption expenditure, public sector capital expenditure and private sector capital expenditure.  GSP measures these four components plus net international trade (i.e. exports minus imports).  

In recent times SFD has provided a much better indication of the overall health of the Queensland domestic economy.  It is a measure that more aligns with what businesses, employees and broader community sees and feels each day.  GSP's inclusion of exports whilst vitally important captures growth that is not felt as much domestically in supply chains and jobs (LNG export is a very good example of this point). 

So in turning to the data Queensland's quarterly SFD growth increased by a healthy 0.7 per cent in trend terms and 0.9 per cent seasonally adjusted in the December quarter 2017 and compares to national growth of 0.8 per cent and 0.6 per cent respectively.  Over the past year (December Qtr 2016 - December Qtr 2018) Queensland's domestic economy has grown by 2.9 per cent in trend terms and 2.6 per cent seasonally adjusted.  This growth was slightly less than national growth of 3.3 per cent and 3.1 per cent respectively.

Queensland growth over the past year has mainly been driven by household and government consumption spending and private sector capital expenditure. In trend terms general government consumption expenditure increased by 4.9 per cent, household consumption expenditure increased by 1.8 per cent and private sector capital expenditure increased by a very healthy 5.3 per cent (albeit off a very low base).  The negative weight was public sector capital expenditure that continues to be significantly less than long-term trend levels.

In summary, the data reveals Queensland's domestic economy has moved on from the contraction experienced between 2014 - 2016 and is now growing steadily.  This is unquestionably good news for jobs, as job creation as a rule of thumb lags economic growth by six months and we should inevitably see the State's unemployment rate fall below its stubborn and cemented 6 per cent.  The data will also hopefully mean wages growth in the not too distant future.  The way to look at the overall relationship between economic activity, jobs and wages is domestic economic activity precedes job creation which precedes a tightening in the labour market leading to wages growth.

 

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