WA takes the economic crown: CBA

For the third quarter in a row, Western Australia topped the economic leaderboard in the latest CommSec State of the States report.

Victoria made the biggest leap, overtaking both Queensland and South Australia to move into second place.

The State of the States report determines which Australian state or territory economy is performing best by tracking eight key economic indicators and comparing the latest observation with decade averages.

"Western Australia performed strongly across multiple economic indicators, as 'The West's' strong relative population growth has boosted labour and housing markets, encouraging consumers to spend," CommSec chief economist Ryan Felsman said.

"Overall, the economic performance of Australia's states and territories is being supported by a strong job market, robust government spending and solid population growth at a time of higher cost-of-living pressures."

However, Felsman said economic growth has slowed as consumer spending remains subdued as borrowing costs remain elevated.

"As we look ahead, an expected reduction in interest rates could boost economic sentiment in the mortgage-sensitive states of New South Wales and Victoria, while the interplay between interest rate cuts, federal election outcomes, and global trade dynamics will be crucial in shaping the economic outlook," he said.

The State of the States report also compares the annual growth rates across eight major indicators, enabling comparisons in terms of economic momentum.

Western Australia ranked first on retail spending, relative unemployment, relative population growth, housing finance and dwelling starts.

Victoria claimed second place, climbing from fourth, with solid results across the board. Queensland slipped from joint second to third, ranking third on retail spending and dwelling starts.

South Australia dropped from equal second to fourth place. Tasmania is steady in joint fifth spot-ranking first on equipment spending. New South Wales moved up to equal fifth from sixth position and now ranks first on economic growth.

The ACT remained seventh for the third consecutive quarter and the Northern Territory remained in eighth place.