The Australian Capital Territory and Western Australia are the best performing states in the country, especially in WA where the mining boom is escalating economic growth to well above “normal” levels, CommSec’s new State of the States report reveals.
But the largest economic downsides can be found in Queensland, the report has found, where the high Australian dollar is impacting tourism and population growth is still below the decade average.
The State of the States report measures all the territories based on eight indicators: economic growth, retail spending, equipment investment, unemployment, construction work, population growth, housing finance and dwelling commencements.
The report measures how each economy is faring compared to “normal”. “And just like the Reserve Bank does with interest rates, we used decade-averages to judge the “normal” state of affairs,” CommSec economist Craig James said.
Overall, the ACT and Western Australian economist are outperforming due to the mining boom in WA, and high population growth and low unemployment in the ACT.
South Australia is also performing well due to high population growth impacting retail spending, along with commercial and engineering construction. Annual population growth in the state is at 1.3% – above the decade average of 0.8%.
The strength of the Northern Territory is due to “very low unemployment” of 3.1%, along with retail trade being almost 30% above “normal”, although the housing sector is now beginning to slow.
Victoria has been pinned as the strongest of the state economies for home building and home purchases, with annual population growth sustaining high investment. Dwelling starts are now 38% than normal.
However, other states are struggling. Tasmanian unemployment is still at 5.9%, although that is still under the normal performance of 6.6%, while population growth is the lowest of all the states at 0.9%.
Queensland is being negatively affected by the dollar, low population growth and retail spending, and New South Wales is still “weak on home building and construction”, even though the state is benefiting from strong employment growth and retail spending.
Western Australia is leading the country in economic activity, with output at 32% above the state’s average level. ACT output was up by 27.5%, followed by the Northern Territory at 18.9% and Queensland at 13.3%.
The Northern Territory is still leading the way for retail trade, with spending 29% above average levels in the June quarter, supported by the strong job market and home prices. Western Australia comes in second, while the ACT comes in last.
Victoria is on top in terms of monthly retail spending, with a 6.1% trend growth rate over the year to August, ahead of the Northern Territory and New South Wales.
Northern Territory has the highest levels of investment compared to the other states, at 80% above average levels. Victoria comes in second at 37.9%, followed by Western Australia up by 37.4%.
Tasmania and the ACT are the weaker markets, with spend investment 16% below long-term averages in the June quarter.
The Northern Territory and Western Australia currently have the lowest unemployment levels, with the jobless rate at 3.1% in NT – 37% below the decade average of 4.9%.
The ACT recorded a 3% unemployment rate, while Victoria recorded unemployment of 5.4%, in line with the state’s normal rate. Tasmania, however, recorded the highest rate at 4.9%.
Construction completed in Western Australia during the June quarter was 88% above the decade average, with the ACT coming up second with work done up by 64% compared to the decade average.
Work in South Australia is also up by 59% compared to the decade, followed by Queensland, where work is up by 37%.
The weakest construction activity was found in the Northern Territory, where completed work was up by 25% compared to the long-term average.
Western Australia recorded the fastest rate at 2.3%, followed by Queensland at 2.2%, with James pointing out that both states have lead the rest of the nation in population growth over the past three years.
South Australia is also recording a solid rate of 1.3%, well above the 0.8% decade average. New South Wales recorded a 1.57% rate while Victoria has fallen from 50-year highs of 2.28% to just 1.97%.
The ACT recorded the top position for housing finance commitments, with the state recording commitments at a rate 12% higher than the decade average. Victoria also recorded the second highest spot, with commitments 0.6% above the long-term average.
The weakest state is Western Australia, with finance commitments down 28% over the long-term average.
The ACT also leads the country in terms of dwelling starts, where commencements stood at 1,108 in trend terms during the June quarter, up by 72% over the decade average. Victoria came in second highest with starts 38% above normal during the quarter.
Victoria was followed by Western Australia, South Australia and Tasmania.
James points out that clearly, all the states and territories are different and are growing at different rates, even though the Australian economy as a whole is performing quite well on the global stage.
The biggest growth factors will be mining and construction in the west, he says, but there are still significant risks, including the high dollar and low retail spending.
“Housing markets have slowed across the nation over 2010 and the trend is expected to continue through to 2011. Similarly, consumers and businesses have also been reluctant to spend over the year and any improvement will be contingent on more settled conditions on global financial markets as well as domestic interest rate settings.”
“The key resource states of Western Australia, Queensland, Northern Territory and South Australia will benefit from on-going industrialisation and urbanisation in China and India. But it won’t all be one-way traffic as a high Australian dollar will negatively impact tourism, export and import-competing sectors in the all states and territories including those dependent on commodities.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
