SA in biggest downturn since early-90s recession

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By Leith van Onselen

South Australia’s Centre for Economic Studies has today released a report arguing that the South Australian economy is experiencing its worst economic downturn since the early-1990s recession on the back of lower investment activity. From the AFR:

The Economic Briefing Report found real state final demand decreased by 2.6 per cent from the previous year, which was the largest annual SFD fall in the period covered by the modern National Accounts data.

Centre for Economic Studies executive director Michael O’Neil said this “sustained decline” indicated the state was in recession…

The state has come under enormous financial pressure over the last year with the government forced to grapple a bulging public sector wage bill, revenue writedowns and the loss of BHP’s $25 billion Olympic Dam expansion project.

Confidence is also low in the state’s manufacturing sector with the future of car maker Holden’s Elizabeth factory in doubt.

Certainly, recent data flow suggests that the South Australian economy is teetering on recession, if not there already.

First, state final demand has declined for three consecutive quarters:

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Next, although South Australia’s unemployment rate is still quite low (5.9%), it has increased significantly over the past 18 months (see next chart).

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More worryingly, the ABS job vacancies series is showing a marked deterioration in employment market, with the number of job vacancies more than halving over the past three years:

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Overall, not a pretty picture.

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    • reusachtigeMEMBER

      That will be the last thing to happen. Meanwhile, here’s how the general thought pattern will play out – “Wow, with this redundancy we can put a deposit down on another IP under me wife’s name coz she’s still employed at Holden, and there’s never been a better time to buy at these interest rates”.

    • The gov’t will still find room for housing stimulus. That’s the last thing that will be cut.

  1. migtronixMEMBER

    Oooh SA. For a minute there I thought it mattered. Seriously though Olympic Dam is a problem U308 has been tanking – long term it’ll perform but will drop production in the short term. The velocity of the fall in vacancies is worrying no upside reversal at all so far this year.

  2. The Patrician

    Re Elizabeth, is anyone aware of Rudds position on further support for the car industry?

    • JunkyardMEMBER

      Does anyone know rudds position on saying the R word? Are we allowed to use it now, or is realistic economic discussion still off limits?

    • If Kim Carr is industry minister, the chequebook will be opened and some very big numbers dished out. Unconditionally, of course. K Rudd thinks we should make things and do does Kim Carr. On top of that, it’s a big vote winner in those electorates.

      • The Patrician

        Nick Champion (ALP) holds the Federal seat of Wakefield (includes Elizabeth) by a 12% margin

  3. This is austerity in action, as carried out in a federated fiscal, customs and currency union. Fiscal and monetary conditions designed to suit the Pilbara, Kimberley and Larrakia have been applied to the economies that lie around the Spencer Gulf and the Gulf St Vincent.

    The Commonwealth really needs to start to exercise its discretion in favour of the “legacy” economies of SA, Victoria and Tasmania.