For the first time in more than a decade, NSW and Victoria aren’t the nation’s top-performing economies.
According to the Commonwealth Bank’s latest State of the States report, Tasmania—which usually lags behind the mainland—has surged into pole position on the back of a growing population.
The Apple Isle has also enjoyed subsequent strong demand for new homes, as well as an improved relative performance of its job market and consumer spending.
CommSec’s quarterly report, based on eight key indicators compared with the decade average within each state, ranks each Australian state based on pure economic growth terms.
Victoria slipped to second position after leading in the last eight quarterly surveys.
The ACT remains in third position, followed by NSW—which has been in the top four economies for the past six years, but economists noted that both states had lost “significant ground” on the top two.
Tasmania, regarded as having the best-performing economy, placed first in four of the eight categories.
The state saw big gains in retail spending, up 14.8 per cent above decade average levels in the March quarter, driven by higher home prices and home building.
It also lifted from last to first with equipment investment, up 14.2 per cent on the decade average.
At the onset of the pandemic in March, Tasmania had Australia’s lowest unemployment rate, at 4.9 per cent, and continued to hold that title in June.
CommSec said the state had remained the nation’s strongest job market, with the state’s unemployment rate 7.4 per cent above the decade average.
It was also the strongest state on the relative population measure, with its 0.97 per cent annual population growth rate 65.9 per cent above the decade-average rate for the year to December.
Economic growth (state final demand plus trade)
^ Rolling annual nominal totals, percent change year to March quarter on decade average.
Source: CommSec, ABS
Victoria maintained top spot on relative economic growth.
Economic activity in Victoria in the March quarter was 26.5 per cent above its “normal”or decade-average level of output, ahead of Western Australia, with output 22.7 per cent above the “normal” level of output.
“While Victoria has slipped to second position in the rankings, largely due to Tasmania forging ahead on a number of indicators, it has generally held steady,” CommSec chief economist Craig James said.
“However, there are now greater risks for the Victorian economy given the second wave of coronavirus and a return to more stringent lockdown that has occurred in recent weeks.”
The Australian Capital Territory came third for strong dwelling starts, housing finance and for holding the lowest unemployment rate, sitting at 5.1 per cent.
^ Percent change March quarter on decade-average. Source: CommSec, ABS
In five of the states and territories, construction work in the March quarter was higher than the decade average, up from four in the previous quarter.
Victoria has retained top spot with construction work done 28.1 per cent above its decade average, bolstered by an increase in spending, up 2.7 per cent compared to a year ago.
Looking to build on its construction focus, the state has approved $3.8 billion in new projects in recent months.
The first tranche of approvals including the country’s tallest residential tower and three mega-projects were announced in April, followed by a fast-track announcement of five shovel-ready priority projects in May and seven development projects worth more than $1.1 billion in June.
Similarly in NSW, a total of 67 projects have been brought forward with the potential to create almost 40,000 jobs and $17.7 billion in economic benefit.