All Australian states and territories bar Western Australia saw economic conditions improve in the second half of 2015, adding to evidence that Australia’s economic transition was gaining traction heading into 2016.
That’s the good news to come from the latest “Stateometer” report released by the ANZ earlier today with New South Wales and Victoria, the largest states by economic output and population, leading the improvement seen in most other parts of the county.
The Stateometer is a gauge of economic performance that uses 16 individual indicators to provide a timely pulse of activity levels across the nation.
The chart below reveals how each state and territory performed in the final quarter of 2015. Those states and territories in the top right quadrant are growing above trend, and accelerating. Those in the bottom left quadrant are growing below trend, and decelerating.
The economies of New South Wales, Victoria, Queensland and Tasmania were all growing at an above trend rate, and accelerating, in the second half of the year.
While below trend, economic activity in South Australia and the ACT were also accelerating, albeit from low levels.
As those regions most exposed to the slowdown in the mining capex boom, along with tumbling commodity prices, Western Australia and the Northern Territory were the only states and territories where economic growth was both decelerating and below trend in the final three months of the year.
Over the longer-term, economic activity levels improved in all states besides Western Australia over the second half of 2015.
Given the Stateometer is compiled using domestic economic data, it provides a visual example of what many people already suspected: that Australia’s economic transition is gaining traction, led by those states highly exposed to services and housing, New South Wales and Victoria.
While this bodes well for Australia’s Q4 2015 GDP report that will be released in early March, given concerns over the validity of recent labour market data from the ABS, along with expectations for a slowdown in the east coast property market in the year ahead, the question remains whether the recent momentum can be sustained in the latter parts of the year.
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