ANZ StateOmeter: broad-based gains

Housing activity remains elevated around Australia and services industry growth is continuing, new research shows, although the momentum from property is likely to slow throughout the year.

The ANZ Stateometer shows demand continues to strengthen across the east-coast states, representing over 70 per cent of Australia's output.


" Non-mining drivers of growth are clearly lifting, and broadening beyond residential construction."
Kirk Zammit & Cherelle Murphy, Economist & Co-Head of Australian Economics at ANZ

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New South Wales leads the pack, followed by Victoria, Tasmania and Queensland – all of which are above trend. Non-mining drivers of growth are clearly lifting and broadening beyond residential construction.

Looking forward, momentum in NSW and Victoria is likely to slow as housing activity moderates over 2016. This could see a balancing out in growth across the three largest states as the year progresses.

In particular, we expect Queensland's economic performance to continue to improve into 2016 as the drag from mining fades and alternative drivers of growth kick in.

While regional Queensland has faced the brunt of the wind down in mining investment and continues to be exposed to mine closures, regional labour-force and building-approvals data also point to some optimism.

The outlook for Tasmania is relatively positive, with economic growth set to continue at a modest pace. The rise in South Australia's index, however, is a little less assured given the headwinds facing the economy.

Conditions remain weak in Western Australia and the Northern Territory as slowing demand in the mining sector permeates through the wider economy.

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.

ANZ Research has 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 shows common trends in the data, and in this case, the underlying pulse of domestic economic activity for each state and territory.

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

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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.