While many continue to fret about the outlook for the Australian economy, the hard economic data of late suggests those fears may well be misplaced.
The chart below from ANZ, something that they’ve dubbed their “Stateometer”, is a gauge of economic performance that uses 16 individual indicators to provide a timely pulse of economic activity levels across the nation.
Those states in the top right quadrant are growing above trend, and accelerating. Those in the bottom left quadrant are growing below trend, and decelerating.
As it reveals, based on recent economic data, almost all regions saw activity levels improve in the three months to November, suggesting that Australia’s economic transition found further traction in late 2015, and not just in New South Wales and Victoria.
In what is a good sign for the rest of Australia’s economy, Kirk Zammit and Cherelle Murphy, authors of the report, say economic activity in New South Wales, Victoria, Queensland, and Tasmania is now accelerating at an above-trend rate.
Combined, these states represent over 70% of Australia’s economic output, so it’s hardly an insignificant development.
While the mining states and territories remain weak — activity levels in Western Australia, South Australia and the Northern Territory all remain below their long-run trends — there are now promising signs starting to emerge for the latter two, particularly South Australia.
Looking ahead, Zammit and Murphy expect the acceleration in New South Wales and Victoria to moderate in 2016, bringing them back to other states and territories.
“Non-mining drivers of growth are clearly lifting and broadening beyond residential construction, which we expect to moderate over 2016 – particularly in the NSW and Victorian markets,” wrote the pair.
“This could see a balancing-out in growth across the three largest states as the year progresses.”