For the first time since CommSec introduced its State of the States economic performance rankings almost nine years ago, Victoria has claimed top spot by overtaking NSW.
“Victoria is in top spot due to strong population growth, driving broad construction activity, especially homes. NSW is in second spot on the economic performance rankings with slippage in a number of housing indicators,” said Craig James, Chief Economist at CommSec.
“Victoria had been closing the gap with NSW on the performance rankings over the past year with construction and dwelling starts lifting over the past quarter. When assessing annual growth rates, Victoria exceeded the national average on six of the eight indicators.”
This was NSW’s first drop from the top spot in almost four years.
The Australian Capital Territory and Tasmania sit behind Victoria and NSW.
“The ACT remains in third spot with a marked improvement in the relative performance of equipment investment. Tasmania remains in fourth position, courtesy of improvement in relative performance of housing finance and dwelling starts,” said James.
Queensland overtook South Australia to take fifth position with firmer population growth driving Queensland’s momentum. South Australia sits in sixth position but there is little to separate the two economies.
The Northern Territory and Western Australia sit behind the other states and territories with the Northern Territory in seventh spot and Western Australia eight. However, CommSec’s report did highlight some positives for both.
“The outlook for the Northern Territory is constrained by weak population growth. But encouragingly retail spending and employment growth have lifted in recent months. There are positive prospects for the Western Australia economy. Population growth is now the fastest in more than two years and equipment investment is at the highest levels in three years," said James.
How does it work?
Each quarter CommSec attempts to find out how Australia’s states and territories are performing by analysing eight key indicators:
- Economic growth
- Retail spending
- Business investment
- Construction work done
- Population growth
- Housing finance
- Dwelling commencements
The aim is to find how each economy is performing compared with their “normal” performance. CommSec uses decade-averages to judge the “normal” state of affairs. For each economy, the latest level of the indicator – such as retail spending or economic growth – is then compared with the decade average.