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End of mining boom still leaving its mark

Economists are expecting to see improved growth during the September quarter after the limp performance in the previous three months.

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Source: AAP


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Economists are hopeful they will see evidence next week the financial year got off to a solid start.

While Treasury has already cut its forecasts for the growth outlook, economists expect the economy at least improved during the September quarter after its dire performance in the previous three months.

They expect next Wednesday's national accounts will show annual growth closer to 2.5 per cent than the two per cent recorded in the June quarter.

That's despite new figures showing the end of the mining investment boom is still leaving its mark on the economy with engineering work tumbling 7.3 per cent during the September quarter.

"The outlook remains bleak as mining projects approach completion," ANZ economists said in a note to clients.

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However, while Wednesday's figures showed overall construction during the September quarter declining 3.6 per cent, residential building actually rose two per cent.

Other recent figures that feed into the economic growth equation have shown exports bouncing back after being hampered by the impact of weather-affected port closures during the June quarter.

Retail spending also remained fairly solid during this period.

That looks like extending into the December quarter with the Retail Council tipping consumers will spend $35 billion in the run-up to Christmas, a 4.5 per cent increase on last year.

Department of Employment figures suggest many retailers already have enough staff to cover the Christmas rush.

Job advertisements on the internet for sales workers fell 5.2 per cent in October, the largest occupational fall in the month.

Overall, job ads fell 1.7 per cent in October, to be a slim two per cent higher than a year earlier.

Treasury will use the national accounts to support its forecasts for the mid-year budget review that is due in mid-December.

But deputy Treasury secretary Nigel Ray told a conference on Tuesday that potential economic growth was now forecast at 2.75 per cent, lower than the three per cent predicted in the May budget.

Treasurer Scott Morrison told parliament - spruiking the government's response to the Harper review into competition law and its potential positive impact on productivity - that the economy was transitioning.

"It does need these productivity enhancements in the years ahead to ensure we can drive growth," he said.


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