NSW continues to lead the nation in terms of economic performance, but Victoria is fast closing the gap.
CommSec’s quarterly State of the States report analyses the performance of Australia’s states and territories across eight key economic indicators. The latest report reveals that NSW leads across five indicators: retail trade, dwelling starts, equipment spending, construction work and employment. However, an improving job market has put Victoria at a close second.
CommSec Chief Economist, Craig James, says, “The most recent data shows Australia’s economies to be in good shape but there are broad differences in relative performance, especially with respect to population growth and housing activity.”
New South Wales
As the best performing economy, New South Wales saw relatively high population growth underpinning home building and retail spending. “New South Wales maintained the top spot on the retail rankings and also led the nation with construction work at record highs. Trend unemployment is also 8.3% below the decade average,” Craig says.
Victoria is ranked second on five of the eight indicators: economic growth, retail spending, population growth, housing finance and dwelling starts. “High population growth and improvement in the job market have strengthened Victoria’s position. December quarter wage growth figures also show Victoria leads the nation, with wages up 2.4% on a year earlier,” Craig says.
Australian Capital Territory
The ACT held on to third place, bolstered by the territory’s strength in housing finance and employment. “The ACT has seen the strongest annual growth of home loans, up 8.4%, with the number of commitments up by 28% on the long-term average,” Craig says.
In fourth position, Tasmania continues to benefit from faster relative population growth, while also posting a strong result for equipment investment. Annual population growth of 0.72% is 32.5% above the decade-average rate. “Equipment investment in Tasmania was at five-year highs in trend terms, and home building starts are up 29.1% on a year ago – the fastest growth in two and a half years,” says Craig.
South Australia is in fifth spot, buoyed by record highs in construction and a solid result for dwelling starts. The state had the second fastest annual growth of retail trade, up 4.0%. However, South Australia’s population growth rate was below decade averages, down 33%. “South Australian construction work done in the December quarter was at record highs and up 19.1% on a year ago,” Craig says.
Queensland remains in sixth position, although the outlook is promising. Population growth is at four-year highs with the state also posting high job growth and a 26% increase in exports. “Queensland has the strongest annual employment rate nationally, at 4.3%,” Craig says.
In seventh position, the Northern Territory is constrained by flagging population growth and employment prospects. However, a number of new projects are planned and exports are growing strongly, up 22% on a year ago. “Economic activity in the ‘Top End’ is 28.9% above its decade average. The Territory also has the fastest nominal annual economic growth rate in the nation, although this has slowed significantly over the past year,” Craig says.
Western Australia continues to face challenges with the transition of resource projects moving from the production to the export phase. “The good news is that dwelling starts in Western Australia continue to lift from four-and-a-half-year lows, while stronger export activity in the Western Australian economy is boosting incomes,” Craig says.
To view the full report, visit https://www.commsec.com.au/stateofstates
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