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Australia’s best state economy: Revealed

·2-min read
Colourful rooftops in the suburb of North Hobart, Hobart, Tasmania, Australia
(Source: Getty)

For the fifth quarter in a row Tasmania has had the best performing economy according to CommSec’s State of the States report.

The ACT remains in second place, but Western Australia showed the biggest improvement jumping into third place from sixth last quarter.

Victoria has shifted into fourth position, followed by South Australia, Queensland, New South Wales and then the Northern Territory.

"Tasmania and the ACT have firmly held their positions at the top of the performance rankings due to above-average population growth in Tasmania, and a strong job market in the ACT," CommSec chief economist Craig James said. 

"As a result, it’s unlikely we’ll see any considerable change at the top of the rankings in the near future.”

CommSec analyses eight key indicators for the survey; 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; we have done the same with economic indicators,” CommSec’s report said.

Key factors

The ACT has the strongest jobs market, according to the report, with a 3.4 per cent unemployment rate.

But, if it’s a pay rise you’re after, Queensland and the Northern Territory lead the way in wage growth, with wages increasing around 1.6 per cent in both regions in the quarter.

The report also confirms that the Aussie housing market is indeed booming, with all eight states and territories showing home loans are above the decade average.

On top of that, national home prices rose 6.2 per cent. The ACT led the way with home prices rising 13.8 per cent.

Looking ahead

The big improvers over the quarter were Western Australia and the Northern Territory. While the NT is still currently sitting in last place, it is closing the gap between itself and its peers.

“The main challenge will come from Western Australia. The state improved five places on swelling starts, two positions on both relative unemployment and housing finance and one place on economic growth,” the report said.

“The Western Australian economy has significant momentum provided by mining and home building. In fact, skill shortages are identified in many building trades.”

The report also said Queensland has the ability to lift in the rankings over the course of the year due to improvements in the job market, rising in-bound migration and increased domestic tourism demand.

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