Stateometer: a clearer picture

A more-consistent economic picture is emerging in Australia, the latest ANZ Stateometer shows, with the national outlook buoyed by further recovery in the mining states in the September quarter.

The Stateometer shows a cluster of states and territories in its upper-right , suggesting above-trend growth. Three states and territories landed within the quadrant, with a further four nearby. 

" The Stateometer shows a cluster of states and territories near or in the upper-right quadrant, that’s good economic news."

Strength in the labour market was a factor in the result, with the reading showing above-trend growth in every state and territory outside the Northern Territory. Solid public sector growth has lifted employment recently, as has infrastructure construction activity.

The Northern Territory was the only region to stand apart during the period, with most states and territories converging a little further.  Queensland and Western Australia again recovered more ground, while New South Wales, Victoria and the ACT held onto growth. South Australia and Tasmania, the two states which have recovered most in 2017, preserved their strength.

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The business sector was only a solid positive contributor to Western Australia’s Stateometer reading in the quarter, despite improving business confidence and positivity out of the Reserve Bank of Australia about the outlook for investment.

Headwinds persist for the important household sector, due to high household debt, anaemic wage growth, slowing house price growth, rising electricity prices and Commonwealth fiscal tightening.

 The dwelling sector was a negative influence in Queensland, Western Australia and the Northern Territory, although positive in the other eastern states. 

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

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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