State of the States Report

State of the States – State & territory economic performance report

How are Australia’s states and territories performing? Each quarter CommSec attempts to find out by analysing eight key indicators: economic growth; retail spending; equipment investment; unemployment, construction work done; population growth; housing finance and dwelling commencements.

Just as the Reserve Bank uses decade averages to determine the level of “normal” interest rates; we have done the same with the economic indicators. For each state and territory, latest readings for the key indicators were compared with decade averages – that is, against the “normal” performance.

The stand-out result is that two economies are out-performing: Western Australia and the Northern Territory. And two economies are under-performing: Tasmania and South Australia. Arguably the size of the gap between Western Australia and Tasmania can’t get any greater.

Western Australia comes out top on three of the eight criteria – actually a slippage from last quarter when it came top on four of the eight indicators. Western Australia is still second on three of the eight indicators, third on another, and fifth on dwelling starts.

The Northern Territory is next placed, ahead of the ACT which has largely re-joined the grouping of NSW, Victoria and Queensland. Then there is a widening gap to South Australia and then to Tasmania.

Looking ahead, CommSec expects the three-speed nature of the economy to become even more apparent.

Western Australia remains the strongest economy ahead of the Northern Territory.

Western Australia remains Australia’s best performing economy, ahead of the Northern Territory. And as noted last quarter, both economies are likely to hold their top positions over 2013.

Western Australia leads the way on retail trade, population growth, and equipment investment. It is second strongest on economic growth, construction work done and housing finance; third on unemployment; and finished fifth on dwelling starts.

The Northern Territory actually finished on top on four indicators: economic growth, unemployment; dwelling starts and construction work done and was second strongest on retail trade.

The ACT economy remains third with the main strengths being dwelling starts and population growth. But the territory is weakest on unemployment with the current jobless rate furthest away from “normal” (decade average) than other economies.

While the ACT is third strongest, it is only modestly ahead of the three largest states: NSW, Victoria and Queensland. NSW is second strongest on unemployment, and third strongest on population growth. Victoria is strongest on housing finance and dwelling starts. And Queensland has high rankings on equipment investment, construction work done and retail spending.

There is then a widening gap in the rankings to South Australia. The hope is that ‘above-normal’ population growth could lift housing demand and retail spending and then, in turn, lift activity in other sectors.

Tasmania remains locked at the bottom of the Australian economic performance table. Tasmania lags all other economies on seven of the eight indicators and is second weakest on the other indicator. A joint effort is required from the Federal and State governments to lift the performance of the economy.

Summary of strengths and weaknesses of our states http://www.aspireretire.com.au/wp-content/uploads/2013/04/comsec-e1366590444417.jpg

Source: Commsec

Full report:  http://www.investing.commsec.com.au/media/114450/e130422.pdf