The ANZ released the third edition of its Australian “Stateometer” today, an alternate composite gauge on economic performance across Australia’s states and territories based on 16 monthly economic indicators that cover labour market conditions, household and business activity, and prices.
According to the ANZ, the index is timelier than other indicators of economic performance, such as GDP, which are released quarterly for Australia’s states and territories. Essentially the Statometer reveals how the economies of Australia’s states and territories are performing compared to their historic long-term averages, based off economic data received over the past three months.
As the chart below reveals, NSW – Australia’s most populous state and largest in terms of overall economic output – is putting the other states and territories to shame at present.
On the back of residential construction boom, the state’s economy is now growing at an above-trend pace compared to historic norms. Not only that, economic activity is continuing to accelerate.
Victoria is the only other state growing at both an above-trend rate and accelerating, albeit at a far slower pace than its neighbour to the north.
The other states and territories are growing at rate below their historic averages with activity in South Australia, Western Australia and the ACT all decelerating, based on recent economic data. While they are now beginning to accelerate, the other mining states and territories – Queensland and the Northern Territory – continue to underperform compared to their long-run averages.
While New South Wales and Victoria are flying high at present, as communicated by the RBA in its semiannual financial stability review released last Friday, the huge uplift in highrise residential construction is creating risks of an oversupply in inner city markets. While the RBA see only a risk of a supply glut in Melbourne and Brisbane at present, it is clear that risks of a similar scenario forming in Sydney are also building.
Should the residential housing construction boom stumble, not only will New South Wales and Victoria come back to the pack when it comes to the ANZ’s Stateometer, it will also drag on national economic growth given the sheer size of the two economies.