April 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 shared the top spot of Australia’s economic performance rankings alongside the Northern Territory. However this time around NSW has edged ahead to take sole ownership of the top ranking.
- In second place is the Northern Territory. The next grouping is Western Australia and Victoria.
- Queensland holds on to fifth spot. The ACT and South Australia are closely grouped in sixth and seventh respectively. Tasmania is ranked eighth.
- Over the past quarter, NSW has improved its position on housing finance and dwelling starts to consolidate its position at the top of the economic performance rankings.
- NSW has retained its top ranking on population growth and retail trade and is also now number one on dwelling starts. It is second placed on business investment, and housing finance. NSW is fourth on overall construction work, unemployment and fifth on economic growth.
- The Northern Territory has drifted to second place, giving up the mantle of best-performing economy. The NT is top on four indicators including the job market, and third on retail trade. But NT is seventh on population growth and eighth on housing finance. Huge gas projects are driving the NT economy.
- Western Australia is second-strongest on four indicators – economic growth, retail trade, construction work and dwelling starts. The state has slipped to fourth on housing finance and is now fifth on equipment investment. Being ranked last on unemployment was the biggest drag.
- Victoria is still the fourth-ranked economy but is closing fast on Western Australia. Victoria is best on housing finance and second ranked on population growth. But Victoria is sixth ranked on both economic growth and equipment investment.
- Queensland retains fifth position. Queensland does best on overall construction work done. But Queensland is seventh ranked on unemployment and sixth ranked on population growth.
- The ACT economy is the sixth ranked on economic performance. The territory ranks third on housing finance and economic growth but seventh ranked on equipment investment, dwelling starts, and construction work.
- South Australia holds seventh spot on the economic performance rankings. South Australia has improved its position on retail trade, equipment investment, and construction work. But it is eighth ranked on dwelling starts.
- Tasmania remains at the bottom of the Australian economic performance table. But it is now ranked second on unemployment. The Tasmanian jobless rate is now holding at 39-month low of 6.5 per cent. In addition dwelling starts are up 50 per cent on a year ago – the fastest growth rate in 12 years.
Implications & Outlook
- In the October 2014 report, Western Australia was passed by NSW for the top spot. And in the January 2015 report, Western Australia had slipped to third, behind NSW and Northern Territory. In the latest report NSW improved its position, pushing Northern Territory into second place on the performance rankings.
- 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 is in second spot. While the NT economy is top-ranked on four 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, strong population growth is supporting home building activity and in turn employment. It is now showing signs of closing the gap on Western Australia in 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.
- 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.
- The ACT is third ranked on housing finance but is sixth ranked on unemployment. As a result the ACT economy lacks momentum.
- There are brighter signs in Tasmania with the trend jobless rate at 39-month lows. Further, dwelling starts are up 50 per cent on a year ago – the fastest growth rate in 12 years.
Read the full report here.