The Tasmanian economy has outperformed all other states and territories for the seventh straight quarter, according to new analysis from the Commonwealth Bank, which has the state ahead on four of the bank’s key indicators.
CBA’s investing arm, CommSec, released its latest “State of the States” report overnight which shows that Tasmania continues to lead the nation in construction, retail spending, relative unemployment and dwelling starts, four of the report’s eight key indicators.
The state came second on the remaining four, which were equipment investment, relative economic growth and relative population growth, let down only by a dip in housing finance.
CommSec chief economist Craig James said Tasmania isn’t likely to face a material challenge from the other states until at least mid-2022.
“Identifying the economy to challenge Tasmania for top position is not easy,” James said.
“Much will depend on vaccination rates, and reopening of state and foreign borders. But stimulus applied by state and territory governments will be important.”
Much of Tasmania’s leading position was driven by a surge in retail spending through the June quarter, which was up 18.1% on the state’s decade average, bolstered by a strong jobs market and a low unemployment rate, which dropped to 4.8% through the quarter.
There wasn’t much splitting the remaining states and territories. The ACT came in second, propped up by equipment investment, where it leads all other states with spending at 64.1% above its decade average.
Western Australia and New South Wales, meanwhile, ranked equal in third, driven by a surge in economic activity in WA, which was 30.9% above the decade average in the year to June, and a strong performance from housing finance in NSW.
South Australia and Victoria came in lower, sharing fifth place, in part due to lags in SA’s retail sector, and slower starts to housing builds and the work across the construction sector more broadly.
In Victoria, like NSW, housing finance performed well through the quarter, only to be marred by slowed population growth and delays to an industry-wide restart to the construction sector.
Rounding out the bottom rankings were Queensland in seventh, and the Northern Territory, which recorded the weakest economic performance of all the states through the last quarter.
Economic activity in Queensland was only 11.9% above its decade average, while nominal economic activity across the state fell 0.6%, which CBA attributes to slowed investments in equipment, along with low population growth, relative unemployment and falling retail trade.
James said lockdowns have likely played a crucial role in Queensland’s stunted economic activity, and could be poised for improvements once lockdown restrictions are eased even further.
“Queensland would be a key beneficiary of the opening of borders with inter-state and overseas tourism driving spending and employment,” he said. “Queensland and Northern Territory will be supported by population growth and higher commodity prices.”
The Northern Territory was let down on various fronts, according to CBA, which found the territory had recorded levels of economic activity just 9.6% above its decade average, let down by a 3.2% drop in nominal economic activity through the quarter.
James said that, overall, Australia’s state and territory economies are in strong shape, thanks in large part to the fiscal and monetary stimulus poured into government schemes over the course of the pandemic.
“Unemployment rates are historically low across much of the nation — remarkable when you consider the COVID-19 challenges and when the broader Australian economy was in recession just over a year ago.”