January 2015 – Overall results
How are Australia’s states and territories performing? Each quarter CommSec attempts to find out by analysing eight key indicators: economic growth; retail spending; equipment investment; unemployment; construction work done; population growth; housing finance and dwelling commencements.
Just as the Reserve Bank uses long-term averages to determine the level of “normal” interest rates; we have done the same with key economic indicators. For each state and territory, latest readings for the key indicators were compared with decade averages – that is, against the “normal” performance.
Last quarter NSW stood on top of Australia’s economic performance rankings for the first time since July 2011. And NSW has maintained its position this quarter. But it has been joined on top by the Northern Territory with Western Australia slipping to third.
The next grouping is Victoria and Queensland. ACT has now overtaken South Australia into sixth spot while Tasmania is ranked eighth.
Over the past quarter, NSW has improved its position on retail spending to consolidate its position at the top of the economic performance rankings.
NSW has retained its top rankings on population growth and is also now also number 1 on retail trade. It is second placed on business investment, dwelling starts and unemployment. NSW is fourth on housing finance and overall construction work and fifth on economic growth.
The Northern Territory has overtaken Western Australia to now share the mantle of best performing economy. The NT is top on five indicators including the job market, but it’s sixth on housing finance and seventh on population growth as well as being third on retail trade.
Western Australia is second-strongest on three indicators – economic growth, retail trade and construction work. The state has slipped to third on both housing finance and dwelling starts and has fallen to seventh on unemployment.
Victoria is still the fourth-ranked economy. Victoria is best on population growth and housing finance (second ranked). But it’s sixth ranked on economic growth and seventh on equipment investment.
Queensland remains close to Victoria in the performance rankings, retaining fifth position. Queensland does best on equipment investment and overall construction work done. But it is sixth ranked on the leading indicators of population growth and dwelling starts and also sixth on unemployment.
The ACT economy has regained its position in sixth spot on the economic performance rankings. The ACT has improved its position on housing finance, economic growth and equipment investment.
South Australia is the seventh ranked on economic performance. The state is third ranked on population growth but seventh ranked on economic growth, dwelling starts, housing finance and construction work.
Tasmania remains at the bottom of the Australian economic performance table. But it has held its third-ranked position on unemployment – in fact the jobless rate is at 28-month lows. And construction work is expanding at the fastest annual rate in eight years.
Implications & Outlook
In July 2014 Western Australia ranked first in economic performance. In the next October 2014 report, Western Australia was passed by NSW. And in the latest January 2015 report, Western Australia has slipped to third, behind NSW and Northern Territory.
There will always be a changing of the guard in terms of economic performance as relative economic growth drivers variably strengthen or fade. The end of the mining construction boom should lead to more balanced growth in Western Australia.
NSW is on top because population has been growing in recent years and now home construction is responding to the shortage of accommodation. NSW looks to be well supported by home construction and infrastructure spending over 2015.
The Northern Territory shares top spot with NSW. While the NT economy is top-ranked on five of the eight economic indicators, it lags on population growth, thus affecting home building activity. Attracting labour to the ‘top end’ remains a constraint on growth.
In Victoria, high population growth is supporting home building activity but it is lacking in momentum that could enable it to move up the economic performance ladder.
In Queensland, overall construction work and equipment spending are supporting economic activity. But the soft job market and relative under-performance on population growth are constraining growth in home building.
The ACT is top-ranked on housing finance but is bottom-ranked on unemployment. As a result the ACT economy lacks momentum.
In South Australia, annual population growth is higher than a year ago and unemployment is middle-ranked. But the state underperforms on retail spending and home building and buying.
There are brighter signs in Tasmania with the trend jobless rate at 28-month lows. Further, population growth has lifted and overall construction is growing solidly.