Stateometer: national strength

Improved economic activity across all states contributed to nation-wide Australian strength in the last quarter of 2017, according to the latest ANZ Stateometer. The outliers were the country’s two territories at either end of the scale. 

A convergence continued in the three months to December as the mining states of Queensland and Western Australia demonstrated an above-average level of activity, while New South Wales continued to grow without acceleration.

“[An economic] convergence continued in the three months to December.” 

Common factors across all state included strong global conditions, public sector spending, accommodative monetary policy and the lower Australian dollar.

Only the small and volatile Northern Territory decelerated at a below-trend pace. Commodity price rises helped speed up the mining states while softer conditions in the residential sector tamed the acceleration in NSW activity.

Helping explain the convergence in overall economic activity has been the emergence of similar trends across sectors. In all regions except the NT the labour market was the strongest contributor.

Despite solid employment growth, household activity was below average in all regions except Victoria and the ACT. The common factor was persistently weak wage growth. High levels of household debt are also affecting spending for some.

Business activity was above-trend in all states and territories except the NT. 

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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