Stateometer: property drives NSW and Vic

The third edition of ANZ’s Stateometer continues to show Australia’s growth comes off the back of the big states NSW and Victoria. Together these states account for more than 50 per cent of the economy and in large part are fuelled by the surge in residential construction and strongly growing house prices.

While conditions for the two largest states are strong now, we see some downside risks to momentum once the rate of new house building activity starts to level off and house price growth slows.

"While conditions for the two largest states are strong now, we see some downside risks to momentum."
Cherelle Murphy & Kirk Zammit, Co-Head of Australian Economics & Economist

Click image to zoom Tap image to zoom

The ANZ Stateometer will be useful in signalling, ahead of official data, when softening housing market activity starts to impact these economies.

The middle of the pack formed by Queensland, Tasmania and the Northern Territory have seen a modest improvement since we published the inaugural ANZ Stateometer about two months ago.

Queensland and Tasmania’s growth momentum is being assisted by the stimulatory impact of the lower $A but the Northern Territory’s is largely due to strong ongoing construction activity related to the Ichthys LNG project.

South Australian economic activity continues to lose momentum while Western Australia’s indicator also slid into the bottom right quadrant.

This indicates that conditions in Western Australia economy are weakening relative to its past strong performance in large part due to the contraction in mining investment spending. The ACT indicator was well below its historical average and lost some of the momentum it gained through winter.

The ANZ Stateometer is an indicator that synthesises a large volume of monthly data to give our clients a one-stop-shop for current state and territory economic conditions. 

We’ve included 16 economic indicators that cover labour market conditions, household and business activity and prices and analysed them using a statistical technique called principal component analysis. PCA allows us to reveal common trends in the data, and in our case, the underlying pulse of domestic economic activity for each state and territory.

Cherelle Murphy is Co-Head of Australian Economics & Economist and Kirk Zammit is an economist at ANZ

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

editor's picks