Stateometer: momentum subsides

Economic activity across Australia’s state and territories moderated over the year to March 2016. Slowing momentum is evident across the east coast, driven largely by a cyclical slow-down in employment and housing.

" Slowing momentum across the east coast has been driven largely by a cyclical decline in employment and housing sector indicators."
Kirk Zammit, Economist, ANZ

Nevertheless, the level of activity remains fairly solid. The ANZ Stateometer shows NSW and Victoria, which comprise around 55 per cent of the economy, continue to grow above trend.

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However the outlook for Queensland, Australia’s third-largest economy, remains uncertain. The Queensland Index fell below its long run trend, with weakness broadly based.

On a positive note, additional stimulus is returning; the Reserve Bank of Australia has recently cut rates with the market pricing in further easing; after appreciating earlier in the year the Australian dollar is now falling and commodity prices have based.

These factors will help to support the structural transition underway nationally.

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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 covering 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

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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