Overall results
How are Australia’s states and territories performing?
- Each quarter CommSec attempts to find out which state or territory is Australia’s economic leader. Now in its 17th 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.
- Overall, the economic performances of Australian states and territories are being supported by a combination of slowing inflation, a reduction in borrowing costs, rising real wages, increasing home prices, robust government spending, a pickup in housing investment and a solid labour market.
- While private sector activity is improving, business investment remains subdued, job growth is slowing, and weaker public sector activity could eventually push up unemployment and slow wages growth. The future path will depend on the resiliency of the labour market, further interest rate cuts and global trade policies.
- Western Australia leads the national performance rankings for the fifth successive report. The state is ranked first on four of the eight economic indicators.
- Queensland has climbed to second from third place driven by a rebound in household spending. South Australia slips to third, but the Northern Territory jumps to fourth from eighth, its highest position since October 2016, supported by solid domestic spending.
- Victoria slips back to fifth from fourth spot, Tasmania drops from fifth to sixth place, NSW dips from equal sixth to seventh, with the ACT now in eighth place.
- Accounting for the eight annual indicators, Western Australia remains in first place, just ahead of South Australia in second and the Northern Territory in third. Queensland stays in fourth spot, followed by NSW (fifth), Victoria (sixth), the ACT (seventh) and Tasmania (eighth).
Analysis
Where to from here?
- Despite a challenging global economic and geopolitical backdrop, stabilising exports, ongoing government support and solid growth in household consumption are expected to drive activity in the resources-led economies of Western Australia, Queensland and the Northern Territory in 2026.
- Consumer spending in NSW, Victoria and the ACT is expected to recover following recent interest rate reductions, but business investment remains weak. Housing construction activity poses an ongoing challenge for both NSW and the ACT amid affordability and supply constraints. The transition from public to private sector-led growth has begun in the bigger states. That said, slowing public demand is expected to continue to weigh on the nation’s capital.
- The Tasmanian economy is awaiting a much-needed housing recovery and rebound in exports amid weakness in both private and public sector investment. A modest outlook for private sector demand remains a challenge. Continuing growth in the private sector alongside a pickup in public demand should support the South Australian economy into the new year.
Methodology
- Each of the state and territory economies were assessed on eight key indicators: economic growth; household 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’. Similar to what 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 household 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, household 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 rates in Queensland and Western Australia stood at 4.2 per cent and 4.1 per cent, respectively, in September 2025. But the Queensland unemployment rate was 20.7 per cent below its decade average of 5.3 per cent, while the Western Australian jobless rate of 4.1 per cent was 18.9 per cent below its decade average of 5.1 per cent. So, Queensland ranks above Western Australia on this indicator.
- Seasonally adjusted or trend measures of the economic indicators were used to assess performance on all measures. The preference was for the less volatile trend measures. Original data is used to assess population growth.
- We now measure economic growth using real state demand plus real net trade in goods and services in seasonally adjusted terms. While the data only extends back over five years, the results can be consistently compared for all economies in real terms.