The ANZ Stateometer, which measures economic performance across the states and territories, continues to highlight the uneven economic growth across the country.
- New South Wales remains the top economic performer according to ANZ’s Stateometer, although it has lost momentum.
- The Stateometer suggests that Victoria and the Australian Capital Territory are both growing at around trend, while South Australia has picked up steam and is approaching trend growth.
- After almost returning to trend earlier this year, Queensland’s growth continues to slow.
- The Western Australian and the Northern Territory economies are still growing at a below-trend rate, although momentum has improved in both cases. Tasmania continues to grow at a below-trend rate.
ANZ monthly stateometer by state:
New South Wales posts string growth, although momentum has eased
- New South Wales continues to drive the national economy, with the state index indicating that growth in economic activity remains well above its trend.
- The index has fallen since the beginning of 2016, which suggests that growth has slowed. This is mainly because the total contribution from property-related activity peaked last year.
- Other drivers of growth in NSW remain solid. Notably, household spending seems to have accelerated recently.
Victoria grows in line with trend
- Economic growth in Victoria is expanding in line with its trend according to the state index.
- The fall in the index over the past four months has been mainly driven by the labour market.
- The contribution to the index from the business sector has also slowed over the past few months
Queensland partly unwinds an earlier improvement
- Queensland economic growth has shown a considerable improvement over 2015, with the state index suggesting growth almost returned to its trend rate earlier this year before easing over the past few months.
- The recent fall in the index reflects a mixed labour market, while the overall contribution from the household sector remains subpar.
- That said, housing construction has picked up recently and tourism remains a bright spot.
South Australia growth approaches trend
- South Australia’s economy has improved considerably over the past six months and the state index is now signalling growth is just below its trend rate.
- The overall improvement in labour market conditions has been a key driver of the recent increase in the index. In addition, the contribution from the household sector is almost back at trend.
Western Australia growth remains weak, but shows a slight improvement
- The state index suggests that economic growth in Western Australia remains at a below-trend pace as the economy continues to adjust to lower commodity prices and a decline in resources investment.
- Encouragingly, the index has risen slightly recently, with some improvement in the business sector. The stabilisation in bulk commodity prices should assist growth as iron ore exports remain strong and LNG shipments are ramping up
- The unemployment rate has fallen from last year’s peak, but hiring demand is likely remain subdued for some time given weak job ads.
Tasmania partly unwinds last year’s improvement
- The state index suggests that growth in Tasmania’s economy has decelerated since the end of 2015, with the economy now expanding at a slightly below-trend rate.
- The main driver of the slowdown has been the deterioration in some labour market indicators. For example, employment growth has weakened substantially over the past six months.
- Surveyed business conditions remain very positive, likely supported by strong tourism demand.
Northern Territory posts well below-trend growth
- Economic activity in the Northern Territory remains weak according to the territory’s index, with growth at a significantly below-trend pace. The index rose marginally in May, but we think it is too soon to know if a turning point has been reached.
- The main drag on the index this year has been the labour market, although the contributions from both the housing market and the household sector have also been relatively weak.
The ACT’s growth has eased, but remains above trend
- Economic activity in the ACT is growing at a slightly above-trend rate, with the territory’s index showing a sharp improvement this year. That said, the index points to some easing in growth over the past two months.
- The key contributor to the improvement in the index this year has been the overall improvement in labour market conditions.