ANZ’s Stateometer, a new economic measure of Australia’s states and territories, showed economic growth in five Australian states was below trend in the year to June as Australian resource investment continues to decline. On the other hand, NSW and Victoria as the country’s top economic performers over the past year, led by strong residential investment, improving business and labour market conditions and pockets of strength in commercial property. Tasmania is close to its trend rate.
Tasmania and Queensland share similar characteristics to the stronger states including solid housing and private consumption and are also benefiting from the depreciating Australian dollar. ANZ says they expect their below-trend lower momentum position on the ANZ Stateometer will change as these drivers lead to recovery rather than further deterioration.
Western Australia (WA) and SA are experiencing downward momentum caused by WA’s ongoing mining consolidation and SA’s weakening industrial sector.
Economic activity increased in the Northern Territory due to recent improvements in its labour market. However it is expected to remain well below its growth trend rate due to a likely ongoing decline in overall business investment.
The ACT increased its momentum significantly but its performance has been well below its trend rate since Commonwealth budget tightening began around 2011.
They conclude that with strong inter-linkages between NSW and Victoria and the rest of the country, the weight of the resources downturn does present a downside risks to these economies. The backdrop of falling commodity prices and unsettled financial markets are also downside risks.
