July 2015
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.
- In the latest results NSW has consolidated its spot at the top of the economic rankings and there is now a wider gap to the next grouping of states and territories.
- Interestingly, Victoria has now taken second spot, leaping both Northern Territory and Western Australia. While there is little to separate these three economies, Northern Australia is in third spot while Western Australia is fourth ranked.
- Queensland barely holds on to fifth spot from the ACT (sixth). They effectively constitute a third tier of economies.
- The fourth tier of economies is made up of South Australia (seventh) and Tasmania (eighth).
- NSW has retained its top rankings on population growth, retail trade and dwelling starts. It is now second placed on unemployment and is also second strongest on equipment investment. The other rankings are: housing finance (third); construction work (fourth) and economic growth (fifth).
- Victoria has now lifted into second spot on the economic performance rankings. Victoria’s main strengths are population growth and housing demand but lags on equipment investment (fifth).
- The Northern Territory is now the third ranked economy, drifting down from equal first to second and now to third in recent surveys. While the Northern Territory is ranked first on four indicators including economic growth and the job market, it is eighth on population growth and housing.
- Western Australia has now drifted to fourth spot on the performance rankings. Western Australia is second ranked on economic growth but slower population growth and higher unemployment are affecting economic performance.
- Queensland retains fifth position on the economic performance table. Queensland does best on retail trade and equipment investment But Queensland is sixth ranked on unemployment, construction work and economic growth.
- The ACT economy has retained sixth position on economic performance. The territory ranks first on housing finance and third on economic growth but is eighth ranked on equipment investment.
- South Australia retains seventh spot on the economic performance rankings but is close to Tasmania on the leader-board. South Australia does best on population growth and equipment investment (both third ranked) but is eighth on construction work done.
- Tasmania remains at the bottom of the Australian economic performance table. While the state is ranked third on unemployment it is either seventh or eighth on five of the criteria assessed.
Implications & Outlook
- There is no doubt that NSW is the premier economic state at present. This is highlighted by an indicator that we haven’t previously included in the State of States report – motor vehicle registrations.
- In fact the top three economies are also ranked top three on new car registrations (sales). And overall – looking at all the indicators – the current economic performance rankings seem to stack up.
- NSW is doing best because population is growing, leading to more homes built and bought and lifting retail spending.
- Victoria is also generating momentum through the similar channels of population growth and housing activity. But softness in the manufacturing sector is restraining momentum of the broader economy.
- In the Northern Territory, the difficulty in attracting workers is keeping the job market tight but it is restricting demand for new and existing homes. But the strength of activity in the gas sector is underpinning equipment investment and overall construction activity.
- In Western Australia, the ending of the mining construction boom continues to trim momentum and thus overall economic performance.
- Queensland retains fifth position. The Queensland economy is middle-ranking on most criteria but encouragingly the trend unemployment rate has hit a 13-month low.
- There are mixed conditions in the ACT. The Territory is strongest on housing finance but is eighth ranked on equipment investment. Unemployment is lowest in the nation at 4.1 per cent.
- There is little to separate the South Australian and Tasmanian economies in the performance rankings. South Australia does best on population growth versus the decade average but this hasn’t yet lifted rankings for housing finance or construction work.
- Tasmanian unemployment hit a 3-year low in January, but has reversed course to an 8-month high in June.