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.
- There has been little change in the latest rankings. NSW has retained top spot as the best performing economy while Victoria has consolidated second spot, with noth states pushing further ahead of the other states and territories.
- The next grouping of economies is the Northern Territory and Western Australia which now share third spot in the performance rankings.
- And there is little to separate economies in the third grouping of state and territory economies. Queensland is fifth ranked, ahead of the ACT (sixth) followed by South Australia (seventh) and Tasmania (eighth).
- NSW has retained its top rankings on population growth, retail trade and dwelling starts but now adds housing finance to the list. NSW is still second placed on unemployment and is also second strongest on equipment investment. The other rankings are: construction work (fourth) and economic growth (fifth).
- Victoria has consolidated second spot on the economic performance rankings. Victoria’s main strengths are population growth, housing finance and dwelling starts (second ranked on each indicator.)
- The Northern Territory remains the third ranked economy, but has fallen further behind Victoria and now shares the third ranking with Western Australia.
- Northern Territory is top ranked on economic growth, business investment and construction work done. But the ‘top end’ economy is last ranked on population growth, housing finance and dwelling starts.
- Western Australia is second on retail trade, economic growth and construction work, but higher unemployment (eighth ranked) has impacted housing activity.
- Queensland retains fifth position on the economic performance table but it is clear that it is now in a third grouping of economies with the ACT, South Australia and Tasmania. Queensland is middle ranked on most indicators.
- The ACT economy has retained sixth position on economic performance. The territory ranks third on economic growth and housing finance but is seventh ranked on three indicators.
- South Australia has held seventh spot on the economic performance rankings but Tasmania is showing better momentum. South Australia does best on population growth and equipment investment (both third ranked) but is seventh ranked on three indicators.
- Tasmania remains at the bottom of the Australian economic performance table. But importantly Tasmania is now top ranked on unemployment and third ranked on housing finance.
Looking Ahead
- NSW is currently the premier economic state and that is made even clearer by looking at another measure of consumer and business spending – motor vehicle registrations. In fact, the new car sales data (or registrations) also confirms the strong position of the Victorian economy.
- NSW has solid momentum. Population is above long-term averages and that is driving home purchase and construction and retail spending. As a result, jobs are being created, keeping the jobless rate stable.
- Victoria also possesses solid momentum through similar channels – rising population growth and housing construction. There is little to separate NSW from Victoria and both economies look to maintain their gap with the other economies.
- In contrast to NSW and Victoria, it is clear that both the Northern Territory and Western Australia are losing momentum. The mining and energy sectors are transitioning from the investment phase to production. But unlike NSW and Victoria, housing demand is not filling the void.
- The Northern Territory is ranked eighth on population growth, housing finance and dwelling starts. Similarly, Western Australia is ranked sixth on population growth and fifth on both housing finance and dwelling starts.
- There has been little movement in the position of Queensland in the state and territory rankings. The Queensland economy is middle-ranking on most criteria but encouragingly the trend unemployment rate is holding at 16-month lows.
- There are mixed conditions in the ACT. The Territory is third ranked on housing finance and economic growth but seventh ranked on three other indicators.
- Tasmania and South Australia have drawn closer to both the Queensland and ACT economies in the economic performance rankings over the past quarter. Tasmania has most potential to improve further, now ranked number one on unemployment and with dwelling starts up over 54 per cent on a year earlier.
Methodology
- Each of the states and territory economies were assessed on eight key indicators: economic growth; retail spending; equipment investment; unemployment, construction work done; population growth; housing finance and dwelling commencements.
- The aim is to find how each economy is performing compared with “normal”. And just like the Reserve Bank does with interest rates, we used 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 – was compared with the decade average.
- While we also looked at the current pace of growth to look at economic momentum, it may yield perverse results to judge performance. For instance retail spending may be up sharply on a year ago but from depressed levels. Overall spending may still be well below “normal”. And clearly some states such as Queensland and Western Australia traditionally have had faster economic growth rates due to historically faster population growth. So the best way to assess economic performance is to look at each indicator in relation to what would be considered ‘normal’ for that state or territory.
- For instance, the trend jobless rate in the ACT of 5.1 per cent is second lowest of all economies. But this jobless rate is actually up 43.3 per cent on its ‘normal’ or decade-average rate of 3.6 per cent, ranking it seventh on this indicator – that is, one of the worst, not best performing states & territories on the indicator.
- Trend measures of the economic indicators were used to assess performance rather than more volatile seasonally adjusted or original estimates.
See the full report here.