WA's home building industry is mired in a "deep and prolonged" downturn according to Bankwest, and while the business lobby has this week celebrated 0.2 per cent overall economic growth, it comes after spending in the state fell off a cliff.

Bankwest chief economist Alan Langford said there had been a steep cyclical downturn in the real value of residential construction work done, including on alterations and additions to existing dwellings.

He said while this figure appeared to have bottomed out, a jump in April's construction approvals, which help predict future spending, was not enough to arrest the industry's long-term decline.

"The increase was not enough to arrest the slide in the trend series, which has fallen by 53 per cent since peaking in 2014," Mr Langford said.

"[It's] the biggest peak-to-trough fall (although they have not necessarily troughed yet) in the history of the series."

Mr Langford linked the poor performance of residential construction to a population slump in WA, which he said was unlikely to be reversed any time soon.

Western Australia saw a jump in interstate migration from the last half of 2010, as people flocked to take advantage of the mining boom as China's rapacious demand for the state's iron ore grew.

But since 2014 thousands have been fleeing the state as job prospects dried up, tied with a global fall in the price of iron ore.

Residential construction accounted for 75 per cent of the industry's value in 2017.

Non-residential construction, which excludes engineering projects, has also experienced a cyclical downswing in the state.

The figures follow a number of WA construction firms — including BCL and Cooper & Oxley — entering administration after financial difficulties.

Meanwhile Mr Langford warned a massive spike in WA's engineering construction spend last year was linked to the Prelude floating LNG project off the north-west coast, the majority of which was produced in a Korean shipyard.

At over five times larger than the world's biggest aircraft carrier, Shell's Prelude floating LNG facility is the largest floating object ever built. ( Supplied: Shell )

He said this industry was vulnerable to distortion by a "clutch of mega-projects" in recent years, particularly as LNG exports have ramped up.

Economic turnaround comes at the end of a cliff-fall

The Chamber of Commerce and Industry WA was yesterday trumpeting the state's domestic economy's return to growth after recent key financial measures, including state final demand, were announced.

In a statement, CCI chief economist Rick Newnham said it was positive news for WA's economy, "finding its feet after transitioning from mining construction to production".

"For the first time in four-and-a-half years the WA domestic economy has expanded," Mr Newnham said.

"Piece-by-piece we are putting together a more optimistic outlook for the future of the WA economy."

Actual growth in seasonally-adjusted terms year-to-year over the past two years was just 0.2 per cent.

This follows five quarters of negative growth on the same figures from September 2015 to September 2016.

Despite a rally in recent quarters, the March quarter fell from December 2017.