Stateometer: softening momentum spreads through the east coast

Cherelle Murphy & Jack Chambers

Senior Economist & Market Economist, ANZ

The ongoing housing adjustment slowed down economic activity along Australia’s heavily populated east coast in the December quarter.

" Credit tightness, which was a catalyst for changing housing market sentiment in the larger states, has also affected the smaller states.”

The housing component of the ANZ Stateometer weakened in New South Wales, Victoria, Queensland and even in South Australia and Tasmania. In contrast to the three biggest states, house prices in South Australia and Tasmania continued to expand into year-end.

Consumer component deteriorated in all states and territories except Western Australia and Queensland compared with the September quarter.

Such a change suggests to us credit tightness – which was a catalyst for changing housing market sentiment in the larger states which have a high proportion of investors – has also affected the smaller states, which are dominated by owner-occupiers.

Adjusting

At a state level South Australia grew at an above-trend rate and accelerated. Tasmania grew at an above-trend rate but with slowing momentum and Western Australia grew at a below-trend rate but accelerated.

New South Wales, Victoria, Queensland, the Australian Capital Territory and the Northern Territory all grew at a below-trend rates and decelerated.

There was some good news in Victoria and South Australia’s labour markets, which continued to expand at an increased rate.

Most of the Western Australia components (consumer, household, business and labour market) also found renewed momentum, suggesting the state is adjusting positively from the mining construction boom.

The ANZ Stateometer is a set of composite indices which 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.

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 & Jack Chambers 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.