December, 2017

Victoria is Snapping at NSW’s Heels


State economies appear to be in good shape with all states recording above decade average levels of activity but with some differences in relative performance, according to the latest CommSec State of the States report.

It’s no surprise that the most populous state, NSW, remains on top but Victoria is closing fast. “Those economies benefiting from favourable population growth are performing best, reflected in stronger home building and retail activity,” the report’s author, CommSec Chief Economist Craig James, says.

They are followed by the ACT, then there is a gap on most measures to South Australia, Tasmania, Queensland, and the Northern Territory.

State of the States

Source: CommSec

Western Australia is lagging well behind, with annual growth rates below national averages on seven of the eight indicators surveyed, reflecting the end of the mining boom.

Victoria gets its numbers up

NSW has the best performing economy and is at, or near, the top of all indicators. Victoria’s strength is being provided by high population growth, which is boosting housing demand. Victorian construction work done was also up 10.3% on a year ago – the strongest growth in 7½ years.

Population growth

Source: CommSec, Australian Bureau of Statistics

The ACT is top-ranked on housing finance, with the number of commitments up by 32.1% on the long-term average, and in third spot on retail trade and economic growth. But the ACT has slipped to seventh on the unemployment ranking.

SA gets a boost

South Australia has experienced a bit of a boost, rising to fourth from sixth on the performance rankings. “South Australia’s lift in rankings is driven by an improvement in the job market, which is serving to boost retail spending and new home starts,” Mr James says. It is third on dwelling starts, business investment and unemployment.

Dwelling starts

Source: CommSec, Australian Bureau of Statistics

NSW has retained its top rankings on retail trade and dwelling starts, and is now top on equipment investment and unemployment. Shoppers in NSW spent 16.9% more than the decade average in the third quarter. The lowest NSW ranking is third on housing finance.

Housing finance

Source: CommSec, Australian Bureau of Statistics

Tasmania is in fifth position on the economic ranking. It is second on unemployment and third on population growth and the improvement is leading to stronger retail spending and more home building.

Queensland is in sixth position but there is little to separate it from South Australia, Tasmania and Northern Territory. Queensland benefits from economy-leading jobs growth at 4.1% and strong export growth of 39% a year.

The bottom two

The Northern Territory retains its seventh position on the economic performance rankings. The Territory is top ranked on economic growth but has slipped from first to fourth on unemployment. And on forward-looking indicators such as population growth, housing finance and home starts, the Territory lags other economies.

The economic performance of Western Australia continues to reflect the ending of the mining construction boom. But the job market continues to improve, with employment growth the strongest in 4½ years. “Western Australia’s stronger job market has the potential to lift retail and housing activity,” Mr James says.