CommSec Research State of the States – July 2022

From

Overall results

  • How are Australia’s states and territories performing?
  • Each quarter CommSec attempts to find out. Now in its 13th year, the 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, enabling comparisons in terms of economic momentum.
  • All states and territories continue to perform well in challenging times.
  • Governments are now are attempting to ‘live with Covid‘, supporting consumers and businesses from cost of living pressures, while at the same time scaling back stimulus measures.
  • In a relative sense, and for the first time in over two years (since April 2020), Victoria holds the mantle of the best performing economy.
  • There are now effectively three groups. Victoria leads from the ACT, Tasmania and Queensland. Just behind in fifth is Western Australia, ahead of South Australia and NSW. And then there is a gap to Northern Territory in eighth position.
  • Victoria is Australia’s best performing economy for the first time since April 2020. Victoria leads other states and territories on relative unemployment and retail trade.
  • Victoria also ranks second on both construction work done and housing finance and third on dwelling starts.
  • Victoria is only slightly ahead of the ACT, Tasmania and Queensland. There is then a small gap to Western Australia, South Australia and NSW. And then there is another gap to the Northern Territory.
  • The ACT has lifted from equal fifth spot to second position – equalling the best ranking since October 2021.
  • Tasmania has eased from first spot to third. Other states and territories are broadly in similar positions to the last report in April 2022.
  • In terms of the leading positions on the economic indicators, as noted, Victoria leads on both retail trade and relative unemployment.
  • The ACT leads on housing finance and equipment investment.
  • Queensland leads the rankings on relative population growth.
  • Western Australia leads on relative economic growth.
  • South Australia leads on dwelling starts and construction work done.
  • When looking across annual growth rates of the eight economic indicators, Queensland had annual growth rates that exceeded the national average on all of the eight indicators.

Analysis

  • We noted in the last report that Tasmania was on top of the overall economic rankings but that the gap had closed between top position and seventh position.
  • Indeed in the latest report, Tasmania has been passed by both Victoria and the ACT. And Queensland was only a smidgen behind in fourth position.
  • Western Australia, South Australia and NSW were in the next group of economies. And there remains a gap between this group and the Northern Territory.
  • Any of the top four economies could top the leader-board in the next survey. But momentum lies with Queensland. When looking at annual growth, Queensland had annual growth rates that exceeded the national average on all of the eight indicators.
  • Further Queensland, together with Victoria and the ACT each recorded the fastest annual growth rates on two indicators.
  • But also of note, Victoria, the ACT as well as South Australia lead the overall performance rankings on two indicators.
  • In terms of future economic performance, much will depend on how economies are affected by growing Covid case numbers and also how they respond to a period of rising interest rates..

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 stood at 3.1 per cent in June with Victoria’s jobless rate at 3.2 per cent. However, Victoria’s unemployment rate was 43.2 per cent below its decade average, while the ACT jobless rate was 22.3 per cent below its decade average. So Victoria 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.

You must be logged in to post or view comments.