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Stateometer: keep on humming

Australia’s economic fortunes have improved, according to the latest ANZ Stateometer, as housing construction keeps economies humming in the south east, resources construction in the west and north comes close to bottoming, while labour markets and trade improve nationwide.

The Stateometer paints a picture of an economy moving closer to its trend rate in the June quarter. Several factors to varying degrees have helped all states, including the stronger global economy, the depreciation of the Australian and lower interest rates.

As the year progresses, ANZ Research expects a more-consistent economic story to evolve as the south-east housing stimulus fades while the large mining states return closer to trend growth.

"The Stateometer paints a picture of an economy moving closer to its trend rate in the June quarter.”  - Cherelle Murphy, senior economist, ANZ

Tighter financial conditions, high household debt, low wages growth and the partial rebound of the Australian dollar may take off some gloss. 

Improved jobs growth due to a more confident and profitable business sector will likely keep these negatives at bay by boosting the household sector.

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In the June quarter, improved labour market conditions lifted all but one state compared to the March quarter. Trade was also positive for all but one geography.

Developments in the business sector lifted the indices for New South Wales, Queensland, Western Australia and the Australian Capital Territory.

While housing is a positive in NSW, Victoria and the ACT it is not adding momentum to these states anymore.

For the household sector, slow spending has become less negative in all of the state indices, except the Northern Territory.

The ANZ Stateometer is a set of composite indices that measure economic performance across Australia’s states and territories.

The index for each jurisdiction extracts the common trend across 37 economic indicators using principal components analysis. The economic indicators are all monthly data series and cover business and household activity, the labour market, the housing market and trade.

We have shifted the frequency of the ANZ Stateometer to quarterly to extract the meaningful trends that are shaping state and territory economies. Developments across this diverse country are rarely uniform and we hope these geographically specific indices help you to see through the haze of state by state data and more intuitively piece together the state of the national economy.

Cherelle Murphy is a senior economist at ANZ & Thomas Hounslow is bluenotes data editor

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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