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Stateometer: point of contraction

Growth in all of Australia’s states deaccelerated to the point of contraction in the June quarter amid the impact of the COVID-19 pandemic, according to the latest ANZ Stateometer.

With largely better news since then in areas outside of Victoria, it is possible that for most the June quarter was the nadir of the downturn.

"All states and territories other than Western Australia, Tasmania and the ACT suffered a fall in economic conditions worse than during the GFC.”

The two territories fared better than the states, with the Australian Capital Territory’s economy growing at an above trend but decelerating rate while the Northern Territory accelerated but at a below trend rate.

All states and territories other than Western Australia, Tasmania and the ACT suffered a fall in economic conditions worse than during the GFC.

Unusually, there was a consistency in the weakness of labour markets, although this was unsurprising given the conditions. Trade worsened everywhere except NSW on reduced global demand, no international tourism and reduced air freight.

Moves across the consumer, housing and business components of the Stateometer were less uniform. In some states, strong household spending in areas like food retailing and homewares offset weakness in services such as restaurant meals and gym memberships.

Softer

Many domestic borders remained closed mainly because of the second wave of COVID-19 cases in Victoria. With the Stage 4 lockdown in early August, Victoria’s economy is likely to have contracted further since.

In the three months to the end of June, the ANZ Stateometer showed Victoria’s economy deteriorated sharply, mainly due to weakness in the labour market and consumer sectors.

There was a small improvement in housing but the business and trade components worsened. (This edition of the ANZ Stateometer does not pick up the state’s second pandemic wave.)

The New South Wales economy also weakened sharply in the June quarter. The labour market component of the NSW Stateometer showed the most significant change. In April, it fell to its lowest since 2000, when the economy was adjusting to the introduction of the GST.

Interestingly, trade and business strengthened a little in the quarter but the consumer and housing components deteriorated marginally.

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 at ANZ

This article was originally published on ANZ’s Institutional website.

 

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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