CommSec State of the States


July 2018

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; business 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.
  • The State of the States report also includes a section comparing annual growth rates for the eight key indicators across the states and territories as well as Australia as a whole. This enables another point of comparison – in terms of economic momentum.
  • For the first time since CommSec introduced the ‘State of the States’ economic performance rankings, Victoria has taken top spot ahead of NSW. However there is little to separate the two economies.
  • In the second group is ACT and Tasmania. The third group is Queensland and South Australia. And then there is a gap to the Northern Territory and Western Australia.
  • Victoria is in top spot due to strong population growth, driving broad construction activity, especially homes.
  • NSW is in second spot on the economic performance rankings with slippage in a number of housing indicators.
  • The ACT retains third spot on the performance rankings ahead of Tasmania which is benefitting from firmer activity in home buying and building.
  • Queensland is now in fifth spot ahead of South Australia, but there is little to separate the two economies.
  • Northern Territory remains in seventh position just ahead of Western Australia. There are positive trends for both economies, especially with regard to investment.

Looking Ahead

  • For the first time since the economic performance rankings were conceived almost nine years ago, Victoria is ranked No.1, just ahead of NSW. Both states have broad-based economic strength, underpinned by construction and investment activity.
  • Victoria had been closing the gap with NSW on the performance rankings over the past year with construction and dwelling starts lifting over the past quarter. When assessing annual growth rates, Victoria exceeded the national average on six of the eight indicators.
  • NSW drops from the No.1 spot for the first time in almost four years with slippage in five of the eight indicators.
  • The ACT remains in third spot with a marked improvement in the relative performance of equipment investment.
  • Tasmania remains in fourth position, courtesy of improvement in relative performance of housing finance and dwelling starts.
  • Queensland has lifted to fifth position, ahead of South Australia with firmer population growth driving momentum.
  • South Australia eases from fifth to sixth position but there is little to separate the economy from Queensland.
  • The Northern Territory remains in seventh spot. The outlook for the Northern Territory is constrained by weak population growth. But encouragingly retail spending and employment growth have lifted in recent months.
  • There are positive prospects for the Western Australia economy. Population growth is now the fastest in more than two years and equipment investment is at the highest levels in three years.


  • 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 assess 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 3.5 per cent is the lowest of all economies. And this jobless rate is almost 10 per cent lower than its ‘normal’ or decade-average rate. However NSW’s unemployment rate, while higher at 4.8 per cent, is actually 10.3 per cent below its decade average, putting it ahead of the ACT on this indicator.
  • Except for economic growth, trend measures of the economic indicators were used to assess performance on all measures rather than more volatile seasonally adjusted or original estimates. Rolling annual nominal data was used to assess economic growth.

Read the full report.

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