Premier Mark McGowan has denied Western Australia is in a recession despite figures released last week that revealed WA was the only state economy to record negative growth in the last financial year.

The 2016-17 Gross State Product (GSP) figures — the state's equivalent to Gross Domestic Product (GDP) — released annually by the Australian Bureau of Statistics, paint a grim picture of the state's economic indicators, revealing a slump in wages, private capital and household spending.

WA's GSP declined 2.7 per cent, which the Australian Bureau of Statistics attributes to a significant fall in large mining investment.

WA has previously averaged growth of 3.9 per cent over the past 10 years.

Mr McGowan said a drop in capital expenditure could be sheeted home to the end of the mining sector's construction boom.

"We're coming out of the biggest construction boom in the history of the country, naturally there's a dip in construction activity," Mr McGowan said.

But he said information he received from the business lobby, the gold industry and mining industry generally showed the state was on the rebound.

"We are doing our utmost both to manage the finances but also to create jobs, and I think the economy is getting better," he said.

"I don't think it will ever return to the peaks of the 2009, 2010 [boom] but at the same time I think it is getting better, stronger, and we can look forward with hope.

"I think there is increasing confidence out there across Western Australia in a whole range of industries, and we are doing our best to promote it."

A recession is defined as two consecutive quarters of negative economic growth as measured by the national GDP figure. GDP is measured quarterly, as opposed to GSP which is measured annually.

Jobs grow but still below trend

ACIL Allen senior economist Ryan Buckland said the data showed there was a contraction in the economy in the 2016-17 financial year, which met the definition of a recession, as major construction projects in the industry moved to the production phase.

He said business investment, which is predominately expenditure undertaken by mining companies in Western Australia, fall by 28 per cent in the financial year.

"It's an extraordinary number, second only to a decline in the late 90s in terms of a single year reduction in business investment, and it really is just a sign those major projects are wrapping up," he said.

A new survey from the WA Chamber of Commerce and Industry has found business confidence levels had risen and 23 per cent of businesses thought they would need to hire more staff.

ABS figures show job numbers have picked up in Western Australia in 2017 in response to a big drop in employment towards the end of 2016. But the full-time employment trend remains below the levels experienced at the start of the mining boom.

A Deloitte economic outlook in June 2017 found Western Australia came last on a range of other indicators last financial year including capital city house price growth and retail turnover growth.

The report predicted wages growth would only rise by 1.7 per cent in 2017-18.

The ABS figures are worse than Deloitte's June prediction of a 0.9 per cent rise in GSP for 2016-17.

Slump in construction, technical services spending

In WA, contribution to GSP was most noticeably down in construction, with the State recording a -2.8 per cent fall, compared with an average -0.3 per cent average fall across the country.

The professional, scientific and technical services industry also recorded a -0.7 percentage point reduction, against a 0.4 percent rise nationally.

However mining grew 0.5 percentage points, as did the category of agriculture, forestry and fishing — attributed to a record wheat harvest.

Meanwhile state final demand — which measures domestic demand — increased in all states except Western Australia.

GSP is propped up by exports while final demand gives a picture of domestic economic growth.

Household expenditure declined in WA 0.2 per cent, while wages also fell over the 2016-17 financial year.