CommSec State of the States: Tasmanian economy out-performs

Tasmania continues to lead the rankings in the latest CommSec State of the States report, while Queensland and Western Australia show the strongest momentum moving into the second half of 2021, largely due to internal migration.

The CommSec State of the States report is now in its 12^th year and uses the latest available information to provide a valuable economic snapshot of how Australia’s state and territory economies are navigating the COVID-19 pandemic.

For the sixth quarter in a row, Tasmania held the mantle of the best performing economy. It led on four of the eight indicators (relative population growth, equipment investment, relative unemployment and dwelling starts) and ranked second on another two indicators (construction work and retail spending). 

However, there is little to separate the other states and territory economies. Victoria was second; ACT, third; South Australia, fourth; NSW, fifth; Western Australia, sixth; Queensland, seventh; and the Northern Territory was eighth.

CommSec Chief Economist, Craig James, said: “It is important to note that all states and territories are performing solidly. That is no small feat in an environment dominated by COVID-19 with the frequent, but necessary, lockdowns and border closures. The aim is to protect the health of Australians while substantial stimulus and support measures protect economies.

“Tasmania remains in top-position in the economic performance rankings. Tasmania leads the nation on four of the eight indicators assessed. It’s unlikely to face any challenge to its dominance on the key economic indicators for at least the next six months.

“Queensland has scope to improve its economic performance in the second half of 2021 due to an improvement in the job market and rising in-bound migration. The jobless rate stands at 12-year lows.

“Similarly, the Western Australian economy has significant momentum provided by strong demand and higher prices in the mining sector. Home building is also strong with dwelling starts at five and half year highs.”

The State of the States report uses the most recent economic data available, however while some data relates to the March quarter, other data – such as unemployment – is timelier, covering the month of June.

State and territory highlights

• NSW is in second position on both housing finance and equipment investment.
• Victoria ranks first on two of the eight indicators – housing finance and construction work done.
  
• Queensland ranks third on relative population growth, relative unemployment and retail trade. The Queensland jobless rate is at 12-year lows.
  
• South Australia ranks third on both dwelling starts and construction work done. Dwelling starts in South Australia stand at 36-year highs.
  
• Western Australia ranks first on relative economic growth with output 23 per cent above the decade average. WA is third-ranked on equipment investment.
  
• Tasmania ranks first on relative population growth, equipment investment, relative unemployment and dwelling starts. Dwelling starts stand at 27-year highs. Tasmania also ranks second on retail trade and ranks third on relative economic growth.
  
• The ACT is top ranked on retail trade and is in second spot on relative economic growth and dwelling starts.
  
• The Northern Territory ranks second on relative population growth. Northern Territory has the fastest annual growth for three of the indicators.

Annual growth rates

• Annual changes in economic indicators are useful for measuring economic momentum.
• On the eight indicators assessed, the Northern Territory tops the annual changes on three measures while Western Australia and Queensland lead on two. Tasmania leads annual growth for equipment investment.
  
• When looking across growth rates for the states and territories, Western Australia exceeds the national average on all of the eight indicators.
  
• Queensland, Northern Territory and NSW have annual growth rates exceeding the national average on five of the eight indicators. Tasmania and South Australia lead the national average on four; the ACT on three; and Victoria on one. 
  

About the CommSec State of the States Report

CommSec, the digital broking arm of Australia’s largest bank, assesses the performance of each state and territory on a quarterly basis using eight key indicators. Those indicators include: economic growth, retail spending, equipment investment, unemployment, construction work done, population growth, housing finance, and dwelling commencements.

Just as the Reserve Bank uses long-term averages to determine the level of "normal" interest rates, CommSec compares the key indicators to decade averages; that is, against "normal" performance. CommSec also compares annual growth rates for eight key indicators for all states and territories, in addition to Australia as a whole, enabling a comparison of economic momentum.