The growth engines for the Australian economy over the past two years — New South Wales and Victoria — are cooling, although both continue to outperform other areas of the country.
That’s the takeout from the latest “Stateometer” offered by the ANZ, a report that uses 16 individual economic indicators to provide a timely pulse of activity levels across the nation.
The chart below, supplied by the bank, reveals how each state and territory performed in April, comparing the results to those seen in March.
Those states and territories in the top half of the chart are growing above trend while those in the lower half are growing below historic norms. Those in the left hand side of the chart, currently where most states and territories sit, have seen momentum weaken, while those in the right hand side have seen activity levels accelerate.
Whole most states and territories are currently growing below trend with activity levels decelerating, ANZ suggests that, on balance, the trends remain positive.
“Economic activity across the east coast states are close to (Victoria, Queensland and Tasmania) or well-above (NSW) their respective long run averages,” said Giulia Lavinia Specchia and Felicity Emmett, economists at ANZ.
“After peaking in Q4 2015, the NSW index has declined somewhat over the past four months. That’s largely been driven by some slowing in labour market indicators and a deceleration in the pace of expansion in the property market.
“In Victoria, the recent slowing in momentum has been driven by a softening in the property market and a slight easing in consumer spending.”
Although both Queensland and Tasmania continue to grow at a below-trend pace, Specchia and Emmett note that these states, along with New South Wales and Victoria, are benefiting from strong growth in tourism exports, helping to offset weakness in other areas.
Of the mining states and territories, all continue to underperform, although there was a noticeable improvement recorded in South Australia.
“The recovery in South Australia seems to have picked up steam. The SA Index now signals the economy is expanding at just below trend growth,” say ANZ. “This largely reflects the ongoing improvement in the labour and property markets.”
On the back of a sharp decline in mining sector investment, “Western Australia and the Northern Territory remain in contraction as their resources sectors continue adjusting to the downturn in mining investment”.
“Resource-related weakness has spilled over into broader softness in housing activity and consumer spending,” say Specchia and Emmett.