CommSec State of the States – April 2020

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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, the 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.
  • Victoria remains the best performing economy but now shares top spot with Tasmania. The ACT has lifted to third spot from NSW. However there is little separating the top four states.
  • Then there is a gap to South Australia and Queensland.  And then follows Western Australia and the Northern Territory.
  • Victoria has now held top position in the economic rankings – either outright or shared – for eight quarterly surveys.
  • The last time Tasmania was on top of the performance rankings was October 2009.
  • The ACT is now third and it has been in the top four economies for just over four years.
  • NSW has been in the top four economies now for six years.
  • South Australia is now in fifth spot, ahead of Queensland. There has been little to separate the two states for just over two years.
  • Western Australia remains in seventh position, ahead of Northern Territory..

Looking ahead

  • On the eight indicators used for comparison, Victoria is now equal with Tasmania at the top of the rankings.
  • The big improvers over the past quarter were South Australia, Western Australia and Northern Territory. The biggest losers were NSW and Victoria.
  • Over the quarter Victoria fell four spots on equipment investment, it also fell by three spots on dwelling starts and also fell by two spots on relative unemployment. But Victoria improved two places on housing finance.
  • Tasmania lifted two places on relative unemployment and retail trade and improved one spot on relative economic growth and construction work. However Tasmania slid five places on business investment and fell one place on housing finance.
  • The ACT rose one place on business investment and dwelling starts and lost one spot on relative economic growth.
  • NSW fell two places on retail trade and one place on each of construction work, housing finance and dwelling starts.
  • South Australia gained three positions on both business investment and dwelling starts and improved one spot on relative population growth. But South Australia fell one place on housing finance.
  • Queensland lost two spots on relative economic growth and fell one place on relative population growth. But Queensland gained one spot on housing finance.
  • Western Australia improved three places on business investment and improved one place on relative economic growth.
  • Northern Territory improved two places on business investment and improved one spot on relative economic growth.

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 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 Tasmania stood at 5.3 per cent in March with the jobless rate at 4.7 per cent in NSW. However Tasmania’s unemployment rate is 17.4 per cent below its decade average, while the NSW trend jobless rate is 8.7 per cent below its decade average. So Tasmania ranks above NSW 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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