Australia’s economy found some momentum in the second half of 2017 after a slow start to the year.
Real GDP grew by 0.6% in the September quarter despite some concerning weakness in household consumption. On top of a 0.8% increase in the June quarter, annual GDP growth accelerated to 2.8%, leaving it around its trend level.
More recently, other economic indicators have strengthened, joining the likes of employment growth and business confidence that were humming earlier in the year.
Building approvals have stablilised, and now appear to be pushing higher, while consumer confidence has risen to the highest levels seen in four years, perhaps contributing to some of the strength seen in retail spending in recent months.
Many, including the Reserve Bank of Australia (RBA) and Australian Treasury, expect that positive momentum to carry through to 2018, forecasting that economic growth will accelerate even further.
Along with a noticeable and unilateral improvement in the global economy, the discussion has somewhat predictably moved from the RBA potentially cutting interest rates to increasing them for the first time since late 2010.
Some think that may occur as soon as the June quarter this year.
Seemingly, things are improving across the broader Australian economy.
However, the individual performance of state and territory economies often plays second-fiddle to what’s happening across the broader Australian economy, creating a void of sorts for those looking to understand what’s happening in their own backyard.
However, that’s not the case at the Commonwealth Bank.
The bank has just released an excellent assessment about what’s happening across the states and territories, using a simple table to evaluate trends from the consumer, housing, business investment, international trade, employment conditions and inflation.
Here it is, broken down into two parts for an better viewer experience.
The first looks at New South Wales, Victoria, Queensland and South Australia.
And this completes the picture, evaluating Western Australia, Tasmania, the Northern Territory and the ACT, Australia’s least populous states and territories.
From a national perspective, the bank expects unemployment to sit at 5.4% by the middle of the year, down from 5.5% at the end of December. Further ahead, it expects that to fall to 5.2% by the middle of 2019.
With unemployment tipped to subside, it looks for wage growth to pick up to an annual pace of 2.3% by June before accelerating to 2.6% one year later.
Economic growth is expected to sit at 2.7% by the middle of the year before increasing to 3.1% by the end of the 2018/19 financial year.
For interest rates, the Commonwealth Bank says the RBA is likely to begin tightening policy settings by the final quarter of 2018.