NSW has extended its lead as the nation’s best performing economy, with ACT the biggest improver in third spot, according to the latest CommSec State of the States report.
The quarterly report shows NSW retains the title of the nation’s number one state economy, continuing to edge out Victoria in second place.
The biggest change over the past quarter has been the improved performance of the ACT, jumping from sixth spot to equal third with the Northern Territory. This growth was driven by improved rankings on equipment investment and dwelling starts.
Western Australia has slid down the rankings from equal third position last quarter to be now ranked fifth. While the state is top ranked on economic growth, it is let down by last placed rankings in both equipment investment and unemployment.
Queensland has dropped one spot from fifth to sixth, with South Australia remaining in seventh place. Tasmania remains at the bottom of the economic performance table in eighth place.
The CommSec State of the States report is a quarterly ranking of the Australian states and territories based on eight key economic performance indicators: economic growth; retail spending; equipment investment; unemployment; construction work done; population growth; housing finance and dwelling commencements.
Craig James, Chief Economist, CommSec, said that while NSW continues to outperform other states, the ACT was the big winner for this quarter.
“It is clear from the latest report that NSW leads other states and territories in economic performance. Of the eight indicators we look at, NSW is on top in six.
“While Victoria hasn’t been able to close the gap with NSW, it is clear that NSW and Victoria maintain a healthy lead in economic performance over the rest of the nation.
“Overall though the outlook for all the states and territories in 2016 is positive, underpinned by low interest rates, consumer spending and home building,” Mr James said.
Detailed findings for each state include:
NSW’s improved performance as the number one state was driven by retaining its top ranking in population growth, retail trade, dwelling starts and housing finance, but also adding unemployment and equipment investment to the list of best performing measures.
“NSW still sits in top spot across a number of individual rankings, including unemployment where it was the only state to have a jobless rate lower than the decade average,” Mr James said.
While NSW slightly extended its lead over Victoria this quarter, the state is still well entrenched in second spot on the economic performance rankings. Victoria’s main strengths are population growth and housing finance (second ranked) and dwelling starts and retail trade (third ranked for each).
“Victoria still maintains a very healthy lead over the rest of the states, despite NSW edging further ahead recently. The state has the strongest population growth in the country, which is underpinning strong retail and housing activity,” Mr James said.
The ACT economy has been the big improver in the economic performance rankings. In trend terms dwelling starts are at record highs and solid home construction will provide momentum to the economy.
“Dwelling starts in the ACT were at record highs in trend terms in the September quarter. Firm home building should support the job market and retail spending over 2016.” Mr James said.
The Northern Territory retained its rank as joint-third best performing economy. The territory is top ranked on construction work done and is second ranked on economic growth, business investment and unemployment. However the ‘top end’ economy is ranked last in population growth and housing finance.
“The Northern Territory’s position is driven by construction work done, which is sitting 117 per cent above the decade average, more than three times higher than the next best state. There will be challenges however in the next few years as key resource projects near completion and low population growth and a weak housing market may constrain economic momentum,” Mr James said.
Western Australia continues to slip in the rankings after losing its number one ranking in October 2014. The state is down to fifth in the rankings from equal third in the previous quarter, however is still strong in some key indicators including the top ranking on economic growth and second on retail trade and construction work done.
“Western Australia continues its decline in the economic performance rankings. With the mining construction boom now all but over, the state is still leading in economic growth, 19 per cent higher than the decade average, however slower population growth and higher unemployment will continue to constrain the state,” Mr James said.
Queensland currently sits sixth in the performance rankings, dropping one spot on the back of the ACT’s ascendency. The state’s best performing indicators include retail spending and dwelling starts (ranked fourth for both), however it’s ranked last on construction work done.
“Queensland remains entrenched in the third tier of economies, alongside South Australia and Tasmania. While it’s not included in the top three states for any of the performance indicators, encouragingly unemployment has fallen to two-year lows in trend terms and dwelling starts have lifted to 7½ year highs,” Mr James said.
South Australia remains in seventh spot in the economic performance rankings. The state performs best in equipment investment, ranked third, as well as fourth placed rankings for population growth and housing finance. It does however rank either seventh or eighth in three other indicators.
“South Australia remains in its position near the bottom of the rankings. In the past eight months however there has been an improvement in the state’s job market, which if the trend continues, could see a positive flow on to retail spending,” Mr James said.
Tasmania continues to trail other states in its economic performance, remaining in last place. The state’s best ranking is in unemployment, currently third, however this is down from its previous number one ranking. It is also ranked last or second last in four other criteria.
“The Tasmanian economy continues to struggle for momentum. The one bright spot has been employment, which fell to near 4-year lows in October. While unemployment has lifted in the past two months, real wage growth remains healthy, which should support retailers and other consumer-focussed businesses,” Mr James said.