The third edition of the ANZ Stateometer continues to show New South Wales and Victoria providing most of the impetus to national growth, fuelled by residential construction.
Queensland, Tasmania, and the Northern Territory form the middle of the pack.
The former two have seen modest improvement since June, which is evidence of the lower currency stimulating economic activity in non-resource industries.
The situation in the Northern Territory is different. Its relative strength is the result of ongoing strong construction activity in the resource sector.
South Australian economic activity continues below trend, while growth in Western Australia has lost momentum.
The annual pace of economic activity in New South Wales and Victoria continued to grow faster than their respective long-run average rates.
The ANZ Stateometer indicates that momentum in the NSW economy continued over the three months to August, while the pace of economic growth in Victoria improved slightly.
With some of the current strength in these two states due to residential construction, we see some downside risks to momentum once the rate of new house building activity starts to level off.
Economic activity in Tasmania is at its long-run average rate, while Queensland has edged higher.
Since the first publication for June, we have seen a slight improvement in Queensland and Tasmania’s growth momentum, likely due to the stimulatory impact of the lower AUD.
Economic activity in the Northern Territory is growing at below average, but the annual pace of growth has improved over the three months to August, mainly due to labour market and construction indicators.
Construction activity remains strong in the NT, supported by the ongoing Ichthys LNG project which has at least 12 months of construction left after the completion time was pushed from end-2016 to Q3 2017.
Labour force data from the ABS shows that construction remains a key contributor to employment in the Northern Territory.
South Australian economic activity continues to lose momentum. The August data (in through-the-year terms) were weak across the board.
Western Australia’s indicator slid into the third quadrant, indicating that conditions in the broader economy have weakened further.
Despite the strong lift in state final demand in the Australian Capital Territory over the June quarter, economic activity remains lacklustre.
This is reflected in the ANZ Stateometer, which shows the ACT indicator well below its historical average.