Stateometer: modest growth continues

Australian’s states and territories continued to grow in the June quarter but at a below trend rate, as housing dragged on the pace of expansion. 

South Australia was the exception, with growth marginally above trend and accelerating, according to the latest ANZ Stateometer. 

"The recovery in housing is likely to be limp due to lingering credit tightness.”

The housing components of the New South Wales and Victorian Stateometer were steady, in contrast to the last year and a half when it has worsened.

ANZ Research expects those economies to feel the ongoing weight of the negative wealth effect and loss of housing construction jobs.

The recovery in housing is likely to be limp due to lingering credit tightness, although tax cuts and rate cuts from earlier in 2019 should begin to provide a boost during the September quarter.

Infrastructure investment has been a source of strength and will continue for at least 12 months, ANZ research expects. Intangible investment to support business services is crucial to the next economic upswing.

Queensland recorded a faster pace of growth in a move likely to be followed by Western Australia and the Northern Territory as exports in those states lift.

ANZ Research is wary of growing risks from the global economic slowdown and various trade wars but the near-term production and export pick-up is largely baked in, at least in volume terms.

Ongoing prospects for the mid-size-to-small states depend on the freshly energized resource sector’s willingness to engage in further investment. 

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 multiple indicators (between 24 and 32 depending on data availability in the jurisdiction). 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 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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