STATE OF THE STATES: NSW and Victoria continue to outperform the rest of the country

Australia’s two-tier economy — where non-mining regions continue to outperform those states and territories more aligned with the fortunes of the mining sector — remained firmly entrenched in the latest quarterly “State of the States” report released by Commsec on Monday morning.

Here’s a map from Commsec showing the individual rankings of Australia’s states and territories by economic performance during the past quarter.

Source: Commsec

As was the previous quarter, Australia’s southeastern states and territories continued to outperform all other parts the nation with New South Wales, Victoria and the ACT ranked first, second and third respectively in terms of economic performance.

“New South Wales has held onto the position of best performing economy on a broad range of economic indicators including economic growth, retail trade, dwelling starts and business investment,” said Craig James, chief economist at Commsec.

“Victoria remains firmly in second place, top ranked on population growth and housing finance.

“The Australian Capital Territory has held onto third position, ranking second on housing finance and third or fourth for other key indicators analysed for the quarterly report.”

Tasmania, at fourth, was the big mover during the quarter, rising from seventh in the previous quarter with “population growth boosting housing demand and supporting the job market”, according to James.

Queensland, at fifth, also saw its ranking improve, benefiting from stronger population growth and home building.

“Queensland is being underpinned by a modest recovery in population growth, driving demand for homes,” says James. “In fact home starts are more than 36% higher than the decade-average.”

Fitting with the continued slowdown in mining infrastructure investment — a factor that saw many of these states and territories outperform in prior years — the Northern Territory, South Australia and Western Australia took at the bottom three spots in the latest Commsec rankings.

“The Northern Territory is lagging other economies in sixth place on forward-looking indicators including population growth, housing finance and home starts, but remains top-ranked on construction work done and unemployment,” said James.

“The South Australian economy, in seventh position, is middle ranked on business investment and fifth ranked on three other indicators while the economic performance of Western Australia continues to reflect the ending of the mining construction boom.”

Commsec’s “State of the States” report ranks the economic performance of Australia’s states and territories each quarter by looking at eight key indicators including economic growth, retail spending, equipment investment, unemployment, construction work done, population growth, housing finance and dwelling commencements.

It’s findings are also similar to those found in the separate “Stateometer” released by ANZ — another report that uses high-frequency economic data to determine economic performance of individual state and territories — which indicated that Victoria, the ACT and New South Wales outperformed all other parts of the country in late 2016.

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