Australia's States and Territories Ranking on Overall Economy Performance

Australia's latest economic scorecard is in, and the results might surprise you. Find out who's up, who's down and the state's and territory you should move to for economic opportunities. Dive into our in-depth analysis of the CommSec State of the States report for October 2023 and see how your region stacks up.

7 min read

The CommSec State of the States report for October 2023 provides a comprehensive analysis of Australia's economic landscape, showcasing how each state and territory stands in terms of economic performance. This insight is crucial for individuals and businesses contemplating relocation, offering a deeper understanding of the opportunities and challenges across the regions. The report, by evaluating factors such as economic growth, unemployment rates, construction activity, and retail spending, highlights Victoria's remarkable rise to the forefront, alongside the competitive economic conditions prevailing in South Australia and New South Wales. This article aims to unpack these findings, offering a glimpse into what these economic indicators mean for potential movers and shakers across Australia.

Rank #1. Victoria

Victoria has impressively leapt from fifth to first in the economic rankings, it has ranked first in both relative economic growth and construction work done. A testament to its robust economic strategy and diversified growth sectors. Key to Victoria's success are its significant improvements in employment rates, with job growth outpacing national averages, and a strong construction sector buoyed by both residential and commercial projects. 

The state's retail sector also shows vigorous activity, reflecting consumer confidence and spending power. This economic resurgence positions Victoria as a magnet for those seeking new opportunities, whether in employment, business, or lifestyle, making it a top consideration for movers aiming for a region with dynamic growth and stability.

Rank #2. South Australia

South Australia has demonstrated strong economic resilience, positioning it closely behind Victoria at second place and now visibly ahead of NSW and Queensland. It also ranks first on the relative unemployment indicator on the Commsec State to States report showing that in September 2023, trend unemployment in South Australia reached an all-time low of 3.7%, which is 38.9% below the average level of the past decade.

South Australia known for its burgeoning industries and investment in renewable energy, South Australia is carving out a niche as a leader in sustainable economic growth. Its labour market is robust, with decreasing unemployment rates indicating a healthy and strong job sector. Additionally, the state's commitment to innovation and infrastructure development has spurred significant construction activity, making it an attractive destination for individuals and businesses looking to capitalise on growth and sustainability.

However, retail spending has remained weak compared to other areas, suggesting consumers might be more cautious about spending money. This could be due to a variety of factors like economic uncertainty, lower income growth, or higher living costs affecting people's willingness to spend. For businesses and policymakers, this signals a need to boost consumer confidence and spending through initiatives like sales promotions, economic stimulus measures, or improving employment opportunities to invigorate the retail sector.

Rank #3. New South Wales

New South Wales maintains its position as a consistently strong economy, driven by its diverse and vibrant sectors. With Sydney as its heart, the state boasts a dynamic job market, extensive infrastructure projects, and a flourishing property market. NSW's financial and tech industries, in particular, offer numerous opportunities for professionals and entrepreneurs. Moreover, its focus on education and healthcare continues to attract individuals and families looking for quality services and lifestyle. This blend of economic vitality and quality of living makes New South Wales a compelling choice for those considering a move.

However, the housing finance sector is cooling, with investment and approvals for new homes not meeting expectations. This reflects broader challenges in the housing market, possibly due to high property prices, stringent lending criteria, or economic uncertainties affecting buyer confidence. Addressing these issues might involve policy adjustments to make financing more accessible, thereby stimulating the housing market and supporting economic growth.

Rank #4. Queensland

In Queensland, housing finance for owner-occupiers, excluding refinancing, is performing notably well, standing 15.3% above the decade average as of August 2023. This positive trend indicates a robust demand for housing, highlighting Queensland's attractiveness to homeowners. Despite a general downturn in home loans compared to the previous year across all states and territories, Queensland's housing finance sector remains a bright spot, suggesting strong market confidence and potential growth in both the real estate and financial sectors.

In Queensland, equipment investment has shown an increase, standing 9.1% above the decade average. This indicates a strong commitment to business growth and infrastructure development within the state. However, when compared across all states and territories, Queensland ranks third from the bottom in equipment spending, with Tasmania leading the charge. Tasmania's top position in equipment investment underscores its focus on enhancing its economic infrastructure and productive capacity.

Rank #5. Western Australia

Western Australia's economic narrative is one of growth and potential, it leads in population growth, showcasing a remarkable 2.82% annual increase—98.3% above the decade average for the year to March quarter 2023. This surge indicates a strong pull for residents and could significantly impact retail spending and housing demand in the state, reflecting its growing economic and social attractiveness.

It is primarily fuelled by its resource sector and the state's focus on expanding its infrastructure and investment in mining and renewable energy projects positions Western Australia as a land of opportunity for those looking to benefit from a growing economy.

Western Australia's landscape, however, isn't without its shadows. Despite the strong pull factors enhancing its population growth and investments, the region has experienced a significant downturn in its construction sector. With a 16.5% drop on construction work done against the decade average, this indicates underlying challenges in the market that could hamper the state's near-term expansion and employment opportunities within this industry. Addressing these issues is essential to sustain Western Australia's economic momentum and ensure that it capitalises on its growing workforce with more and more people moving to Western Australia.

Rank #6. Tasmania

Tasmania continues to surprise onlookers with its commendable strides in economic performance, coming in at rank six. The state's equipment investment is exceptionally high, sitting at the forefront when compared to its counterparts, indicating vigorous economic activity and a strong entrepreneurial spirit. The investment in equipment is crucial as it suggests businesses are preparing for future growth and are committed to improving productivity and efficiencies.

Furthermore, Tasmania's dedication to tourism and niche markets, such as its burgeoning whisky industry, is paying dividends, contributing to a diversification of its economy. Added to this is its reputation for a high quality of life and pristine natural environment, which has seen Tasmania become an increasingly popular destination for both tourists and new residents.

This is underpinned by Commsec State to States October 2023 report showing Tasmania leading in dwelling starts, 4.8% above the decade average as of June quarter 2023, highlights its strong housing market and potential for economic growth. This suggests a healthy demand for housing, which is a positive sign for Tasmania's economy, indicating robust construction activity which can stimulate job creation, retail trade, and overall economic performance.

However, Tasmania's position as the state with the lowest population growth could impact future housing demand. This discrepancy might lead to challenges in sustaining the current level of housing construction activity if the population does not grow at a pace to meet the new supply. This dynamic warrants attention from policymakers and developers to balance housing supply with anticipated demand, ensuring economic stability and growth.

Rank #7. Australia's Capital Territory (ACT)

Ranked 7th is the Australian Capital Territory (ACT), leading in retail spending, showcasing a strong economic performance despite challenges like the rising cost of living and negative real wages. With retail spending in the June quarter of 2023 being 14% higher than the decade average, the ACT not only tops the list but also shows the fastest annual growth in real retail trade. This resilience in consumer spending reflects a robust economy and consumer confidence within the ACT, setting it apart from other regions in terms of retail economic vitality.

With the ACT experiencing a 1.96% annual population growth and leading in retail spending, its economy shows remarkable stability. This growth supports a vibrant consumer market and signals a healthy economy, making the ACT an attractive destination for movers. The consistent economic performance, fuelled by population growth and high consumer spending, suggests a strong job market and quality of life, appealing for those considering a move to the city.

Rank #8. Northern Territory

The Northern Territory's (NT) annual population growth rate at 0.85%, marking a significant 63.1% increase over the decade average, positions it fourth in relative annual population growth. This indicates a noteworthy uptick in the NT's attractiveness and potential economic vitality, reflecting positive trends for the region's future development and appeal to new residents and businesses.

Despite the Northern Territory's notable increase in population growth, it continues to face challenges with low retail spending. This could impact economic momentum, as retail spending is a key driver of economic activity, influencing job creation, business growth, and overall economic health. Addressing this issue may require targeted strategies to boost consumer confidence and spending, fostering a more vibrant local economy.

Conclusion

The CommSec State of the States report for October 2023 paints a detailed picture of Australia's economic landscape, showcasing the diverse opportunities and challenges across its states and territories. Victoria's rise to the top spot highlights the dynamic economic shifts that can occur, emphasising the importance of staying informed about regional trends for those considering relocation. Whether it's the robust growth in Western Australia, South Australia's focus on sustainability, or the consistent performance of New South Wales, each region offers unique prospects for individuals and businesses. This analysis underlines the significance of economic indicators in making informed decisions about investing, establishing business, or moving to Australia and any of it's states and territories.