While we always focus on the ‘big picture’ economic data for the country as a whole, I’m always fascinated by how the individual states and territories are performing.
CommBank publishes a quarterly State of the States report, which always makes for great reading.
The findings
Overall, the latest report found that the economic performance of Australian states and territories is being supported by a combination of slowing inflation, lower borrowing costs, rising real wages, increasing home prices, robust government spending, a pickup in housing investment, and a solid labour market.
While private sector activity is improving, business investment remains subdued, job growth is slowing, and weaker public sector activity could eventually push up unemployment and slow wages growth. The future path will depend on the resiliency of the labour market, further interest rate cuts and global trade policies.
Western Australia leads the national performance rankings for the fifth successive report. The state is ranked first on four of the eight economic indicators.
As for the the others:
- Queensland climbs to second place from third, driven by a rebound in household spending.
- South Australia slips to third.
- The Northern Territory jumps to fourth from eighth – its highest position since October 2016 – supported by solid domestic spending.
- Victoria falls back to fifth from fourth.
- Tasmania drops from fifth to sixth.
- NSW dips from equal sixth to seventh, and the ACT sits in eighth place.
National horoscope
Looking forward, consumer spending in NSW, Victoria and the ACT is expected to recover following recent interest rate reductions, but business investment remains weak. Housing construction activity poses an ongoing challenge for both NSW and the ACT amid affordability and supply constraints. The transition from public to private sector-led growth has begun in the bigger states. That said, slowing public demand is expected to continue to weigh on the nation’s capital.
The Tasmanian economy is awaiting a much-needed housing recovery and rebound in exports amid weakness in both private and public sector investment. A modest outlook for private sector demand remains a challenge.
Continuing growth in the private sector, alongside a pickup in public demand, should support the South Australian economy into the new year.
Until the nest State of the States report.
