20 January 2014
Melanie Timbrell
Commonwealth Bank of Australia
The resource rich states of Western Australia, Northern Territory and Queensland continued as frontrunners in CommSec’s quarterly State of the States report.
WA once again came out in front, leading the other states in retail spending and ranking second for six other economic indicators including business investment, construction work and unemployment.
The only area where the western state lagged was new housing construction, in which it ranked fourth.
The Northern Territory is now the second strongest economy, nudging out the Australian Capital Territory on the strength of economic growth, construction work, retail trade, new housing and a substantial reduction in unemployment.
The ACT is now tied in third place alongside Queensland, with the territory’s main weakness being a loss of momentum in business investment, while it also finished fifth in the retail trade, unemployment and construction metrics.
Queensland led the way in terms of business investment and came in third strongest on economic growth, retail trade and construction with a notable improvement in housing finance.
NSW and Victoria followed with little separating the two states in terms of economic performance, with NSW ranked third strongest on unemployment, population growth, housing finance and new housing.
Victoria came in strongest on housing finance but fourth strongest on retail trade, business investment and population growth.
The southern states of South Australia and Tasmania once again lagged the rest with stagnant population growth reducing activity in Tasmania and adding to weaknesses in construction and business investment.
Real wages, which factor in inflation, grew in all states except the Northern Territory with the strongest growth occurring in South Australia, followed by the ACT and Western Australia.
Home prices are now higher than a year ago in all capital cities across Australia, with Sydney recording the strongest growth (up 14.5%) followed by Perth (up 9.9%) and Melbourne (up 8.5%). “All economies should lift now that consumers and businesses are showing a sustained level of optimism,” said CommSec economist Savanth Sebastian.
“The low interest rate environment is boosting housing construction, while rising wealth levels is supporting confidence and in turn spending.” The slowdown in mining investment will continue to affect some regions, Sebastian said. However, this should be offset by a lift in residential building with NSW, WA, Queensland and the ACT expected to benefit most from a lift in home building.
Courtesy of the Commonwealth Bank of Australia