If you’re interested in how our property markets are going to play out as the year unfolds, you’ll need to keep an eye on how economy is performing
And the ANZ Stateometer, which measures economic performance across the states and territories, continues to highlight the uneven economic growth across the country.
- The ANZ Stateometer suggests some convergence between the economic performance of most Australian states and territories. The recently strongly growing states have softened a little while the mining states, which had been lagging, are showing signs of stabilising.
- Solid labour market conditions and the housing sector continue to support growth in New South Wales and Victoria. The index for New South Wales is below trend, however, and growth in Victoria eased somewhat.
- Both Queensland and Western Australia showed better momentum. While activity in Western Australia continues to expand well below trend pace (which in part reflects the very strong growth rate during the height of the commodity boom) the weight of the downturn is lifting. The Queensland index moved higher, although slack in Queensland’s labour market continues to weigh on economic activity. The steady improvement in labour market conditions continues to lift growth in the Northern Territory.
- South Australia and Tasmania were little changed and remain close to trend growth, while the index for the Australian Capital Territory has lost ground as job growth slows.
Note: AUS 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
POSITIVE MOMENTUM ACROSS SECTORS IN NEW SOUTH WALES
- The smoothed New South Wales index ticked higher in March, up for the second consecutive month.
- The acceleration in the housing market – supported by a surge in unit approvals, solid growth in housing finance commitments and strong house price inflation – was the main driver of the gain. Indeed, the housing component in our index posted a positive reading for the fourth month in a row and signals that the sector is now expanding at well above trend pace.
- The other sectors (household, business, labour and trade) also improved somewhat. Overall growth remains below trend.
MOMENTUM IN VICTORIA REMAINS STRONG
- After reaching a six-year high early this year, the smoothed Victorian index moderated in March. The index remains above its long-run average and the underlying data continue to suggest that there is momentum in the state’s economy.
- Strong population growth is supporting job growth and housing demand, with both the housing and labour components expanding at an above-trend pace.
- In turn, solid activity in the housing sector and relatively low unemployment contributed in lifting spending and supporting the household sector.
- Only partially offsetting this strength, the business component deteriorated somewhat, while trade was broadly unchanged.
QUEENSLAND’S GROWTH SEEMS TO SHOW THE WORST IS OVER
- The smoothed QLD index ticked higher in March, but it remains well below trend.
- The improvement in the index was marginal but broadly based.
- The sharp lift in the value of resource exports has been the prime driver of the gains. Some improvement in the housing sector – largely led by a lift in housing finance commitments and a pickup in dwelling starts – also contributed to support the index.
- Conditions in the labour market have also improved, although the state’s unemployment rate remains well above its long-run trend. Slack in the labour market is weighing on the household sector.
SOUTH AUSTRALIA’S GROWTH REMAINS CLOSE TO TREND
- The smoothed index for South Australia’s economy ticked lower in March and remains close to the zero-mark, signifying trend growth.
- Conditions in the labour market have moderated somewhat but remain positive, supported by solid growth in the employment-to-population ratio, the rising participation rate, and a pickup in SEEK job ads. There was some deterioration in business conditions.
- The other sectors (households, housing, trade) were little changed.
MOMENTUM CONTINUES TO IMPROVE IN WESTERN AUSTRALIA
- The index for Western Australia was broadly unchanged in March. While the index remains well below its long-run average, the improvement over the past months suggests that the state’s economic growth is no longer deteriorating.
- The improvement in the state’s labour market has been the prime driver of the turnaround in the index. In addition, rising export volumes and the recent pick-up in resource prices are adding to growth.
- Partially offsetting these trends, the household sector deteriorated somewhat, led by weaker spending.
- The other sectors (business, housing) were broadly unchanged.
TASMANIA’S GROWTH REMAINS CLOSE TO TREND
- Tasmania’s economic growth was broadly unchanged in March, and it remains very close to trend levels.
- Strong population growth is boosting job growth and supporting housing demand.
- That said, the household sector weakened somewhat, largely on the back of some deterioration in spending.
- The other components of the index (trade and business) were little changed.
MOMENTUM REMAINS POSITIVE IN THE NORTHERN TERRITORY
- After reaching a five-year low in April last year, the territory’s smoothed index has gradually trended higher, and it currently sits at its highest level since June 2014. The index is now slightly above zero, signalling that the state’s economy is expanding at close to its trend growth rate.
- A steady improvement in labour market conditions has been leading the gains, with the employment-to-population ratio moving higher since March last year.
- The recent lift in commodity prices also supported growth, while the housing sector seems to show some signs of stabilisation
- That said, momentum in the household sector remain weak.
THE AUSTRALIAN CAPITAL TERRITORY’S GROWTH IS ALMOST AT TREND
- Economic activity in the Capital slowed in March, and it is edging closer to trend.
- The loss of momentum has been driven by a weakening in labour market conditions.
Source: ANZ Stateometer
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