CommSec’s quarterly State of the States report shows the New South Wales economy continues to lead the nation, however Victoria is well placed to consolidate, or even improve its position over the coming year.
NSW continues its lead based on top rankings in three of the eight leading economic indicators analysed for the report: business investment, retail trade and dwelling starts. And Victoria’s second place reflects its top ranking in population growth and second ranking in retail trade and business investment.
The ACT has comfortably held onto third spot in the performance rankings. Stronger housing activity and a lift in business investment will support the job market and retail spending over the coming year.
Craig James, Chief Economist, CommSec, said: “There’s been little change for relative economic performance over the last quarter with the podium again held by NSW, Victoria and the ACT. Strong housing activity and firm population growth are all contributing to their success.”
The Northern Territory economy, in fourth position, is still being supported by commercial and engineering activity but economic momentum is weakening.
South Australia is being assisted by stronger home prices and home loan activity. The Queensland economy has scope to lift over the coming year, supported by home building, tourism and rural exports.
The Tasmanian economy has improved over the past quarter in relative terms. The economic performance of Western Australia reflects the ending of the resources construction boom.
“While the end of the mining construction boom has seen WA slip in the rankings, in terms of the outlook we expect income levels will lift in line with record mining export volumes and the recent improvement in resource prices,” Mr James said.
The CommSec report analyses the performance of the states and territories each quarter by looking at eight key indicators: economic growth; retail spending; equipment investment; unemployment; construction work done; population growth; housing finance and dwelling commencements.
Detailed findings for each state include:
New South Wales
NSW has retained its top rankings on business investment, retail trade, and dwelling starts. But it is now is second place on unemployment, construction work, population growth and housing finance. NSW is in third spot for economic growth.
“NSW remains on top of the economic performance rankings but it may experience a challenge from Victoria over the coming year. Overall construction work is providing solid momentum to the economy,” Mr James said.
Victoria remains in second spot on the economic performance rankings. It is top ranked now on population growth and ranked second on retail trade and business investment. Victoria is third ranked on construction work, housing finance and dwelling starts.
“Victoria remains in second spot on the performance rankings and given its solid growth on a number of key indicators, the state is well positioned to consolidate or improve its position,” Mr James said.
Australian Capital Territory
The ACT has held on to its position as the third ranked economy. It is top ranked on housing finance, second on economic growth and third ranked on retail trade, unemployment, business investment and population growth. Retail trade is up 5.1 per cent on a year ago.
“The ACT has comfortably held onto third spot in the performance rankings. Stronger housing activity and the lift in business investment will support the job market and retail spending over the coming year,” Mr James said.
The Northern Territory holds fourth position and remains in top spot for economic growth, construction work done and unemployment. However the Territory is ranked last on four indicators – population growth, business investment, housing finance and retail trade.
“The Northern Territory is losing momentum and as key resource projects are completed, activity levels will slow further unless a lift in investment takes place. Slow population growth, weak demand for housing loans and a sharp fall in business investment will constrain economic momentum,” Mr James said.
The South Australian economy is in fifth position. It is middle ranked on business investment and housing finance and fifth ranked on three indicators.
“The South Australian housing market continues to lift as investors and owner-occupiers broaden their view. Annual growth of home starts and home loans are solid,” Mr James said
Queensland is second-ranked on dwelling starts while population growth is lifting.
“Queensland is second strongest on dwelling starts and population growth is the fastest in 15 months. Both tourism and agricultural exports will provide momentum in coming months and higher coal prices are encouraging,” Mr James said.
Tasmania is fourth ranked on two indicators and fifth on three. Annual growth on home lending is strongest in the nation at 10.3 per cent.
“The Tasmanian economy has improved over the past quarter in relative terms. Population growth is close to the fastest annual pace seen in five years. Both home loans and home prices are lifting,” said Mr James.
The economic performance of Western Australia reflects the ending of the mining construction boom. But income levels will lift in line with record mining export volumes and the recent improvement in resource prices.
“While Western Australia is in transition-mode after the mining construction boom it is still fourth for retail spending and sixth on home building commencements,” said Mr James.
Find out more about the latest State of the States report.