SA Data Wrap – Spending growth slows as national house prices fall

Spending growth slows
Quarterly National Accounts data released by the ABS this week indicate that spending growth in South Australia has slowed through the course of the year. Quarterly growth in state final demand (SFD) in real trend terms slowed from 0.8 per cent in the March quarter to 0.4 per cent in the September quarter. But growth through the year to September was 2.5 per cent, which is quite healthy by recent historical standards.

SFD actually fell by 0.2 per cent in seasonally adjusted terms in the September quarter. However, seasonally adjusted estimates of SFD fluctuate quite substantially and we believe the ABS trend estimates are a more reliable guide toward the underlying direction of the economy.

A loss of momentum in household spending has contributed to the slowdown in final demand. Growth in household final consumption expenditure slowed from 0.6 per cent in the December quarter 2017 to 0.3 per cent in the September quarter. This pattern is consistent with ongoing sluggish growth in labour incomes and employment levels flattening off over the past six months.

Business investment grew at a slower though still healthy pace in the September quarter (1.3 per cent) after rising quite strongly through the first half of the year. And dwelling investment grew by 0.8 per cent.

The weakest of the main demand aggregates is public investment. It fell for the fourth consecutive quarter in the September quarter (down 2.0 per cent).

We will provide a more in-depth analysis of South Australian and Australian economic conditions in our December Economic Briefing Report, which will be released to Corporate Members on 18 December.

Further house price falls in eastern capitals
Data on house prices released by CoreLogic this week sent some jitters though local financial markets because they pointed to a further weakening in housing markets, particularly in the eastern capitals. National dwelling values were 0.7 per cent lower in November, led by large falls in Sydney (down 1.4 per cent) and Melbourne (down 1.0 per cent). Over the past year, dwelling values in these two cities have fallen by 8.1 per cent and 5.8 per cent respectively.

Adelaide dwelling values rose by just 0.1 per cent in November and were up 1.4 per cent over the year.

The best performing capital cities over the past year were Hobart (up 9.3 per cent) and Canberra (up 4.0 per cent).

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