CommSec State of the States – July 2020

From

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.
  • Now in its 11th year, 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 October 2009, Tasmania holds the mantle of the best performing economy in its own right. Three months ago Tasmania shared top spot with Victoria. The ACT remains in third spot from NSW but both economies have lost ground on the top two.
  • Queensland is back in fifth spot from South Australia. Then follows Western Australia and the Northern Territory.
  • As noted above the last time Tasmania was on top of the performance rankings was October 2009. It replaces Victoria which held top position in the economic rankings – either outright or shared – for eight quarterly surveys.
  • The ACT remains 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.
  • Queensland is now in fifth spot, ahead of South Australia. 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

  • The big improvers over the past quarter were Tasmania, Queensland and Western Australia. The biggest losers were South Australia, NSW and the ACT.
  • Over the quarter Tasmania gained seven places on equipment investment and one place respectively on retail trade, economic growth and relative unemployment. However Tasmania fell one spot on both housing finance and dwelling starts.
  • The Victorian economy was relatively stable across the eight indicators. That may change in the next survey as a result of the effects of COVID-19 on the economy.
  • The ACT lost four spots on equipment investment and lost two spots on relative unemployment
  • NSW fell two places on both relative unemployment and relative economic growth and one place on both dwelling starts and retail trade.
  • Queensland gained three spots on both relative unemployment and equipment investment and gained two spots on retail trade. But it lost two spots on relative economic growth.
  • South Australia lost five spots on equipment investment and one spot each on construction work and relative unemployment.
  • Western Australia improved one place each on relative economic growth, relative population growth and equipment investment.
  • Northern Territory improved two places on relative unemployment but lost two spots on equipment investment.

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 seasonally adjusted jobless rate in the ACT was 5.1 per cent in June with the jobless rate at 6.9 per cent in Tasmania. However Tasmania’s unemployment rate is 7.4 per cent above its decade average, while the ACT jobless rate is 29.4 per cent above its decade average. So Tasmania ranks above the ACT on this indicator.
  • Except for economic growth, seasonally adjusted or trend measures of the economic indicators were used to assess performance on all measures. While preference was for trend measures, in many cases these have been suspended in the wake of the COVID-19 crisis. Rolling annual nominal data was used to assess economic growth.

Read the report.

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