This release updates statistical information on key economic indicators, thereby presenting an updated snapshot of the New South Wales economy and providing relevant points of comparison with other Australian States and Territories.
According to the RBA Statement on Monetary Policy, growth in the Australian economy was below trend for the duration of 2013. This was largely caused by declining mining investment, subdued growth in consumer spending and non-mining business investment, and ongoing fiscal restraint.
While economic indicators at the national level remain varied, the NSW economy has exhibited further signs of recovery in the April 2014 quarter, driven largely by positive growth in employment and a sustained resurgence in the housing market.
Specifically, total employment in NSW rose for the third consecutive month in March and is 1.2 per cent higher than in December 2013. The unemployment rate for NSW is also at its lowest level in over a year, with unemployment at 5.3 per cent for March and averaging 5.6 per cent for the quarter. NSW now has the second lowest unemployment rate of the other States in Australia. Wages have also grown in NSW, albeit at a relatively subdued pace.
The housing market in NSW, underpinned by considerable growth in prices, has continued to be one of the main drivers of economic growth. The established house price index rose by 4.9 per cent for the December 2013 quarter. This was the highest growth compared to all of the other States and Territories. Since September 2012, the quarterly established house price index for Sydney has grown by 17 per cent, or by 3.2 per cent on average.
The sustained growth in house prices has seen housing supply growth continue, with building approvals up 6 per cent in NSW for the December quarter. While building approvals declined in January and February (which are historically weaker months for approvals), the forecast growth in house prices, coupled with the low interest rate setting, should provide a sufficient incentive for a continuation in residential construction growth. According to the Commonwealth Bank, improvements in business confidence and profitability will help prolong the upswing that is coming in non-residential construction.
The turnaround in the NSW economy has also been characterised by strong retail sales growth, in which the average monthly turnover of retail trade rose by 2.6 per cent in the December 2013 quarter, and is 5.5 per cent higher than the 12 months previously. NSW accounts for just under one third of all turnover of retail trade in Australia.
Looking forward at a national level, the RBA expect economic growth to strengthen in 2014, though it is expected to remain just below trend (around 2.75 to 3 per cent annual growth). It is then expected to pick up further to an above-trend pace by 2015/16. Strengthening business conditions, retail sales growth, house price growth and a further depreciation in the exchange rate are all factors likely to underpin economic growth in Australia over the next couple of years.
The outlook for NSW also remains positive across a number of key indicators. In particular, forecast growth in housing prices will provide further impetus for the recovery in residential and non-residential construction. Improvements in tourism, consumer spending and employment are expected to sustain economic growth in NSW for the foreseeable future.
This April 2014 edition of Economics Indicators: NSW updates statistical information on key economic indicators, thereby presenting an updated snapshot of the NSW economy and providing relevant points of comparison with other Australian States and Territories. Statistics are updated to the end of the most recent quarter available. Most indicators have thus been updated to include the December 2013 or March 2014 quarters. There are no updates to the sections on gross state product, agricultural production and business investment as this is annual data released by the ABS in November 2014.