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Tasmania leads the nation: CommSec

For the first time since October 2009, Tasmania has taken out CommSec's top gong as the best performing economy in its own right.

It replaces Victoria, which has held the top spot in the online stockbroker's State of the States survey - either outright or shared - for eight quarters.

The survey ranks each state and territory using eight key indicators, including economic growth, retail spending, equipment investment, unemployment, construction work done, population growth, housing finance and dwelling commencements.

Tasmania ranked first on relative population growth, relative unemployment, equipment investment and retail trade, while Victoria ranked first on economic growth and construction works done.

Economic activity in Victoria in the March quarter was 26.5% above its decade-average level of output, ahead of Western Australia with an output of 22.7% above the norm. Tasmania came in third (up 21.2%), while NSW (21%), the Northern Territory (20.5%) recorded similar economic outputs.

The ACT (20.1%), Queensland (18.9%) and South Australia (15.3%) came in at the other end of the spectrum.

Retail spending in Tasmania was up 14.8% above decade-average levels in the March quarter, with strong population growth, higher home prices and home building boosting spending.

Victoria recorded retail spending 14.4% higher than the average, while Queensland came in third (11.5%).

The ACT, NSW, South Australia, Western Australia and the NT recorded retail trade growth of 11.3%, 9.9%, 7.8%, 4.8% and 0.6% respectively.

In the March quarter, three states and territories had equipment spending levels above the decade-average, down from five economies in the December 2019 quarter.

Only Tasmania, Western Australia and NSW reported a lift in spending levels, with equipment investment up 14.2%, 2.6% and 2.3% respectively.

Meantime, equipment investment was down 19.7% in the NT, 9.1% in South Australia, and 7.2% in Victoria.

On a one-year basis, equipment investment was up only in Western Australia (up 19.2%).

Meantime, Tasmania came out on top with the strongest job market compared to the decade-average.

"Despite the COVID-19 shock, the Tasmanian unemployment is only 7.4% above the decade average," CommSec said.

"Next best is Queensland, its 7.7% jobless rate being 27.7% above the decade average. The ACT comes next (29.4% above the decade average) from Victoria (33.2% above the 10-year average) and NSW (33.3% above the decade average)."

Western Australia scored the worst in unemployment in CommSec's survey, recording its highest jobless rate since January 1994 (63% above the decade average).

In five of the states and territories, construction work (including residential, commercial and engineering work) was higher than the decade average, with Victoria maintaining the top spot (up 28.1%).

Tasmania's construction industry was the second strongest, up 18.8% above the norm, while NSW, ACT and South Australia came in soon after (7.4%, 6.3% and 3.3% respectively).

Construction in the NT was down 73.5% compared to the decade-average, with Western Australia and Queensland also underperforming (45.2% and 24.3% respectively).

CommSec assessed population growth by analysing the current annual growth rate with each economy's decade-average, with only two economies recording levels about the long-term average.

"Population growth is clearly an important driver of the broader economy, especially retail spending and housing demand," it said.

"Tasmania is strongest on the relative population measure, with its 0.97% annual population growth rate 65.9% above the decade-average rate for the year to December.

"South Australia is now next strongest on relative population growth, up 5.8% on the decade average."

Annual population growth rates in Queensland (down 4%), Victoria (down 9.7%), NSW (down 17.6%), Western Australia (down 19.3%), the ACT (down 46.1%) and the NT (down 146.3%) all reported population growth rates well below the norm.

However, the state with the fastest absolute annual growth rate is Victoria (up 1.87%), followed by Queensland (up 1.57%) and Western Australia (up 1.28%).

Housing finance, a leading indicator of real estate activity, lifted above the decade average in five of the states and territories.

This compares the value of owner-occupier housing finance commitments (home loans) with the decade average for each economy.

"The ACT remains in top spot with the value of home loans up by 31.2% on the long-term average. Next strongest is Victoria (up 24.4%) followed by NSW (up 11.1%) and Tasmania (up 7.5%)," CommSec said.

"Northern Territory remains the weakest for housing finance with commitments 39.5% lower than its decade average. Commitments in Western Australia were down 33.5% on the decade-average, followed by Queensland (down 7.2%) and South Australia (up 1.2%)."

On a one-year basis, the ACT remained in the top spot with the value of home loan commitments up 21%.

The ACT also recorded the highest rate for dwelling starts, ahead of Tasmania and South Australia.

"Home building is strong in the ACT due to relative strength in the job market. And home building is strong in Tasmania because population growth is well above 'normal'," CommSec said.

"In trend terms starts in the ACT were 21.7% above the decade-average, followed by Tasmania (up 20.5%). South Australia is now in third spot with starts up 7.3% on the decade average, from Victoria (broadly flat) and NSW (down 9.7%)."

Dwelling starts in the NT, Western Australia and Queensland fell below decade-long averages; down 67.2%, 37.4% and 21.7%.

Other key indicators used by CommSec to measure economic performance, were inflation rates, real wages growth and home prices.

Hobart had the highest annual inflation rate in the March quarter (up 3.4%), ahead of Melbourne (2.7%) and Adelaide (2.4%).

Meanwhile, only four economies recorded positive wage growth in the quarter, with the biggest decline in real wages seen in Tasmania (down -1.0pps).

"The biggest real wage gap was recorded in Northern Territory with wages 0.9pp higher than consumer prices. Next were Queensland and the ACT (both +0.3pp)," CommSec said.

"Wage growth in the year to the March quarter was strongest in Victoria (2.5%), ahead of Tasmania and the Northern Territory (both up 2.4%). The lowest growth of wages was in Western Australia (1.8%)."

Home prices lifted in six of the eight states and territories over the year to March, while home prices lifted nationally 7.8% over the year to June - the fastest annual gain in nearly three years.

The strongest annual growth in home prices was in NSW (up 11.4%). Victoria (up 9.5%), Tasmania (up 8.2%), the ACT (up 6.3%), Queensland (up 4.4%), and South Australia (up 2.1%) also recorded positive home price rates.

Home prices dropped over the year in the NT (down 0.9%) and Western Australia (down 3.1%).

When looking at growth rates across all eight indicators, Victoria and the ACT exceeded the national average (on six of the eight indicators), while Tasmania (five), Queensland and Western Australia (four) and the NT (three) also improved.

Read more: CommSecState of the StatesEconomics
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