The West Australian economy is performing so well it’s leaving the rest of the country behind, according to the latest CommSec report into the states’ economies, although it warns the Australian Capital Territory is at the highest risk from spending cuts in next week’s budget.
The quarterly report into the country’s state-based economies reveals some disturbing trends – the Queensland economy in particular is suffering due to a lack of support for housing, while Tasmania’s economy has seen the “greatest slippage”.
However, the rest of the country is still performing well, with each state shining in different metrics.
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The Western Australian economy is performing so well, CommSec economist Craig James says the country needs to be evaluated in two separate metrics – with Western Australia, and without.
“In the last two quarterly reports, we judged that Australia’s multi-speed economy could more accurately be described as a three-speed economy,” James said.
“But in the latest report the best way to describe the situation is Western Australia first and daylight second.”
Western Australia leads the way on economic growth, construction work, unemployment, retail trade and equipment investment – and second when it comes to population growth.
Dwelling starts and housing finance were the only black spots on WA’s record, out of the eight metrics used to judge each economy. ACT and Victoria were in the “second tier” of economies, with both out-performing housing indicators and Victoria positive on retail spending.
Queensland, New South Wales and South Australia are all in the next “tier”. Queensland is benefiting from restructuring work, while New South Wales is growing strong on population growth.
Tasmania has suffered the worst, lacking momentum in “key areas”, with the state now alongside the Northern Territory, which has strong retail spending but low population growth.
However, there are bright spots. Both Victoria and the ACT are winning when it comes to housing indicators, and Victoria’s retail spending remains high, and Queensland is still enjoying a significant amount of rebuilding work.
The state is leading the rest of the country in most metrics. Economic output was just over 32% higher than the state’s decade average, while it’s also taken the top ranking for retail trade with spending in the December quarter almost 21% above decade average levels.
It also remains “well above” other states and territories with equipment investment, and a strong jobless rate of 4%. Construction work is 82% above decade averages, although it’s second for population growth, at 2.63%.
It’s also equal third for housing finance, alongside New South Wales. Dwelling starts were also 15.2% below decade averages.
Victoria’s jobless rate may be increasing, but its retail trade is 14% above decade averages. And
equipment investment was down by 3.2%.
However, construction activity is increasing, with the state in the second place for housing finance, and dwelling starts 14% above decade averages.
Victoria’s set to hold its spot in the top three despite that slowdown in the housing market, although CommSec says greater investment from public and private sectors could help it maintain momentum.
Economic growth in the ACT is up 18.2%, although retail trade is poor – below all other states. The jobless rate is 3.6%, although that’s actually 5% higher than the normal or decade-average level.
Housing finance commitments are actually strong, however, with the number 6.2% above the decade average, with commitments also 3.3% higher than a year ago. Dwelling starts are also “head and shoulders” above the rest of the states, based on strong population growth – one key area of hope.
New South Wales
New South Wales joins the ACT with the weakest retail trade in the country, and economic growth is also poor.
However, there are bright spots. The jobless rate of 5% is below the decade average of 5.3%, and housing finance is also equal third with Western Australia.
Despite some of Queensland’s economic troubles the state is actually performing extremely well, with economic growth at the fastest rate in the country at 9.8% – even ahead of Western Australia.
Retail trade is also strong, although it comes under Victoria’s level of 14% above decade averages. Equipment investment is up 40%, the population growth is the highest recorded over the past year – although housing finance is down 22%.
Dwelling starts were also down 34.9% below decade averages, and starts in the December quarter were down 12.1% than a year ago – CommSec notes housing is the state’s biggest weakness.
Retail trade remains strong, alongside Queensland after Victoria at the top, and the jobless rate is actually quite strong at 5.1% – 6.6% below the longer-term average of 5.45%.
However, South Australia remains one of two states where real wages were negative – along with the ACT. Retail spending is up, but only by 0.3%.
The state seems to be performing well with no major negative or positive factors, CommSec says, although that’s due to the relatively low unemployment.
Economic growth has remained weakest in the Northern Territory, alongside New South Wales and Tasmania.
However, retail trade has remained high, in second place, due to low unemployment with just a 4% jobless rate. That’s 9.9% below the long-term average.
And while construction work is above the long-term average, it’s only up by just 0.6%. Engineering work – a driving force for several economies including Queensland and Western Australia – is down by 4.6%. However, CommSec expects that to improve.
Construction work hit a two-year high in the December quarter, and is actually up 43% from last year, which is the fastest rate in the country.
CommSec notes it has the potential to climb its way back up, with the $34 billion LNG Inpex project to have “enormous multiplier effects” on the economy.
The island state is performing poorly. Economic growth is the weakest, at negative 1.6%, while retail trade is also at the slowest in the country.
Equipment growth is strong, up 45%, although the jobless rate has risen from 5.1% to 7.2% in the space of just seven months – that’s 18% above the decade-average.
Construction spending is down 12.2% from last year, and population growth is up just 0.55%.
However, there is some good news, with dwelling starts and equipment investment suggesting higher growth in the pipeline.