Today the ABS released its annual State Accounts publication for financial year 2017/18. This publication provides the most detailed report available on the South Australian economy in aggregate; the ABS quarterly publications are less detailed.
South Australia’s gross state product (GSP) grew by 2.0 per cent in 2017/18, compared with 2.8 per cent growth in Australia’s GDP. GSP growth was stronger in Victoria (3.5 per cent), Queensland (3.4 per cent), Tasmania (3.3 per cent) and New South Wales (2.6 per cent), but slightly weaker in Western Australia (1.9 per cent).
The data suggest that a stronger GSP growth trend has emerged in South Australia over the last 2 years, after several years of quite weak growth.
South Australia’s GSP growth in 2017/18 was dampened by a substantial fall in the output of the agricultural sector. Agricultural output fell back to more normal levels after a bumper wheat crop in 2016/17. The GSP of all South Australian sectors excluding agriculture actually rose 2.9 per cent in 2017/18, which was the strongest growth rate for more than 10 years.
State final demand rose solidly by 3.4 per cent in 2017/18 and this followed a 3.6 per cent rise in 2016/17. Household final consumption expenditure rose by only 2.0 per cent, but there was strong demand growth in capital expenditures (up 7.2 per cent) and solid growth in government consumption (3.6 per cent).
Households’ gross disposable income grew by just 2.3 per cent in current price terms, which is suggestive of real growth of less than 1 per cent. From this perspective the relatively low growth in household consumption spending is unsurprising.
We will investigate more of the detail of these State Accounts in our forthcoming Economic Briefing Report, scheduled for release on 18 December.
Local government price index
The September 2018 quarters results of the Local Government Price Index – released by the SA Centre for Economic Studies today – show that price inflation faced by the local government sector in South Australia has moderated over the last six months. The LGPI rose by 2.9 per cent through the year to the September quarter, down from a previous peak of 3.2 per cent through the year to the March quarter 2018.
The gap between price inflation faced by local government and households has widened due to an abrupt slowdown in the latter. Consumer price inflation as measured by the Adelaide Consumer Price Index (CPI) fell to 1.8 per cent year on year in the September quarter from 2.7 per cent in the previous quarter. One-off factors drove this fall, including the introduction of the Child Care Subsidy in early July and reintroduction of a rebate for the Emergency Services Levy. In addition, the large rise in electricity prices that occurred in 2016/17 has now fallen out of the latest annual growth results.