The incisive quarterly look into the state of the Australian economy by Commsec Chief Economist James Craig was released today showing that Western Australia’s broad shoulders continue to carry the country.
The State of the States report shows a WA economy smashing every other state to the point where it’s more accurate to consider the state of the national economy as a whole, and then every state excluding WA.
Wrapping up the results, Craig surmised ‘‘In the last two quarterly reports, we judged that Australia’s multi-speed economy could more accurately be described as a three-speed economy. But in the latest report the best way to describe the situation is Western Australia first and daylight second.’’
The report ranks each of the state and territory economies on eight key economic indicators; economic growth, retail spending, equipment investment, unemployment, construction work done, population growth, housing finance and dwelling commencements.
“Western Australia comes out top on five of the eight criteria. The worst results were being ranked fourth on two of the eight indicators. So when discussing the Australian economy it is best to focus on two concepts: total Australia, and Australia excluding Western Australia.” Craig noted of the findings.
The report tells a tale of state and territory economies, excluding WA, struggling to gain momentum. Victoria, the ACT, Queensland and Tasmania all saw unemployment rise over the March quarter, while all States but two had falling dwelling starts.
Confirming suspicions of a falling housing market, home prices fell by over 3% on an annual basis in every State but Tasmania, where they fell 0.3%.
On the retail front, WA and the NT recorded spending over 20% above decade averages, a result underpinned by low unemployment. Both these States recorded an almost 10% improvement in jobless rates compared to their decade long averages.
The ACT and Victoria were the next best overall economic performers after WA, then a bit of a gap before Queensland, New South Wales and South Australia. The Northern Territory and Tasmania brought up the tail, with the latter seeing the greatest deterioration in economic conditions over the past three months.
In an interesting correlation, the overall results very closely reflect the rankings in population growth rates.
The general picture painted by James’s report is of an economy still very much running at two speeds as resource rich WA continues to boom ahead.
The NT should jump on this wagon of resource project driven growth with the massive $34 billion Inpex natural gas project in particular to boost its economy. But for the others there’s no new major development driving digging on the cards.
The ACT continues to benefit from above average population growth but remains at the most risk of spending cuts in the coming Budget. For Queensland it’s a case of the mining pie largely underpinning its solid performance with above average unemployment and population growth the biggest concerns there.
Victoria, South Australia and New South Wales look set to continue plodding along with no major boosts or bumps in sight but for Tasmania it’s not such a clear outlook. Spending is down in the Apple Isle as unemployment continues its march north, now at 7.2%.
Overall the country looks like a pretty steady ship, but take WA out and dig a bit deeper into each State’s statistics and there’s some swell under the surface. Expect next month’s Budget to take note and look to smooth some leveling fiscal policy over the cracks appearing around the country.
Failing that, the first speed of the Australian economy’s going to continue to appear a whole lot faster than our clunky second gear.