The ANZ Stateometer, which measures economic performance across the states and territories, continues to highlight the uneven economic growth across the country.
- A key theme in this month’s release is the improving momentum evident across Australia. This mainly reflects the contribution of improving business conditions – which are lifting growth across the country – and rising commodity prices, which are providing some support for the mining states.
- Although the index for New South Wales continues to slow, momentum seems to have stabilised on the back of a re-acceleration in the housing sector. Solid labour market conditions continue to support growth in Victoria, which is now expanding at well above-trend pace.
- Activity in Queensland and Western Australia continues to expand at well below trend, but growth seems to be bottoming in both states likely supported by the pick-up in commodity prices. Momentum in the Northern Territory continues to accelerate driven by a steady recovery in the labour market.
- Rising housing prices and improving labour market conditions are providing some support to economic growth in Momentum seems also be turning for South Australia, led by a pick-up in consumer and business confidence. The index for the Australian Capital Territory continues to lose ground – driven by a moderation in job growth.
Note: Australia is the Gross State Product-weighted combination of the state and territory indices. The pale markers show the previous month’s readings.
Source: ABS, CoreLogic, National Australia Bank, Residex, SEEK, Westpac, ANZ Research
ANZ monthly Stateometer by state:
MOMENTUM IN NSW SEEMS TO BE STABILISING:
- Although the smoothed New South Wales index weakened, the actual index ticked higher in December.
- While momentum in the labour market continues to slow, all the other sectors (housing, household, business, and trade) improved in December. This suggests to us that momentum in the state’s economy may have stabilised.
- The acceleration in the housing market – with elevated auction clearance rates and strong house price inflation – is now adding to growth. Indeed, the housing component in our index has turned positive – signalling above longrun growth – for the first time since June 2016.
- The recent improvement in business conditions and the ongoing strength in household confidence are also helping to offset the moderation in labour market indicators.
- The underlying data suggest to us that the NSW index may tick higher in January.
VICTORIA’S ECONOMY ACCELERATES IN DECEMBER:
- The Victorian index suggests the state’s economy continues to expand at an above-trend pace – with the index edging higher in December.
- While the household sector seems to have lost some momentum, the ongoing strength in the labour market and a rebound in business conditions are contributing to a lift in growth.
- In addition, rising house prices and a pick-up in housing finance commitments are providing some support to the state’s economy.
- The underlying data suggest the index may tick higher in January.
RISING EXPORTS ARE PROVIDING SOME SUPPORT TO GROWTH IN QUEENSLAND:
- The smoothed QLD index ticked down in December and it remains well below trend.
- The pick-up in the value of resource exports is providing some support to growth. Indeed, our component for the trade sector turned positive for the first time since end- 2012. However, the other sectors (household, business) remained little changed, at well-below trend levels.
- The underlying data suggest some upside risks for January’s reading.
SOUTH AUSTRALIA’S GROWTH HOLDS AT TREND:
- Although the smoothed index continued to slow, the actual South Australia index ticked higher in December – with the economy holding close to its trend growth rate.
- The loss of momentum over the past few months largely reflected a slowdown in the consumer sector. However, momentum in the household sector seems to be turning, with both consumer confidence and spending edging higher in December. Business conditions have also improved somewhat over the past few months.
- The underlying data suggest to us that the index will tick higher in January.
THE WA INDEX SUGGESTS THAT GROWTH MAY HAVE BOTTOMED:
- The index for Western Australia edged higher in December, but it remains well below average.
- The improvement in the index has been broadly based, with a pick-up in both the labour market and the housing sector leading the gains. Rising export values are also providing some support to growth.
- The underlying data suggest to us that growth in WA may have bottomed, although any improvement will likely be moderate. We expect the index to tick higher in January.
BETTER MOMENTUM IN TASMANIA:
- Tasmania’s economic growth edged higher in December, although it remains well below average.
- The better momentum has been broadly based, with improvement in labour market conditions leading the gains.
- The underlying data suggest to us that the index will be little changed in January.
GROWTH IN NT IS NOW CLOSE TO TREND:
- The Territory’s smoothed index has been rising since April 2016 and currently sits at its highest level in more than two years. The index now sits very close to zero, signalling that the state’s economy is expanding at close to trend growth.
- The improvement in the index has been broadly based, with a sharp acceleration in both the labour market and the housing sector leading the gains. The recent lift in commodity prices is also supporting growth.
- The underlying data continue to suggest some slight improvement in January.
THE ACT’S GROWTH HOLDS WELL ABOVE TREND:
- Economic activity in the Australian Capital Territory continued to slow in December, but remains well above trend.
- Over the past few months, the key contributor to the improvement in the index has been the buoyancy in labour market conditions – but momentum in the job market is now slowing.
- The underlying data suggest the index will be little changed in January.
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