Victoria now Australia’s top performing economy

Melbourne suburban retail stripVictoria has unseated New South Wales as Australia’s top performing economy buoyed by a strong population growth and a lift in construction activity, which includes construction of new homes, according to a recently released report.

The latest CommSec State of the States report showed that for the first time in nine years, New South Wales has been bumped from the top spot as the country’s top performing economy.

Craig James, chief economist at CommSec, said strong population growth, underpinning a lift in construction activity, has resulted in Victoria nudging New South Wales out of the top spot for economic performance.

“However,” James said, “there is little to separate the two economies, with the common features being firm population growth, higher home building and stronger job markets.”

James said while New South Wales has the strongest job market in the nation and is showing good economic growth, a number of housing indicators softened this quarter, including home loans and spending on new plant and equipment.

CommSec, the online broking arm of Australia’s largest bank, assesses the performance of each state and territory on a quarterly basis using eight key indicators which include economic growth, retail spending, business investment, unemployment, construction work, population growth, housing finance, and dwelling commencements.

Just as the Reserve Bank uses long-term averages to determine the level of “normal” interest rates, CommSec compares the key indicators to decade averages; that is, against the “normal” performance.

In the latest report, Victoria ranked first for three of the eight economic indicators (construction work, economic growth and dwelling starts), taking top spot in the performance rankings for the first time since CommSec introduced the report in October 2009.

NSW maintained its top rankings for retail spending and the relative performance on unemployment, coming in second overall, while ACT maintained third place, continuing to lead the nation for home loans. Tasmania was strongest on relative population growth.

CommSec also compares annual growth rates for the eight key indicators for all states and territories, in addition to Australia as a whole, enabling a comparison of economic momentum. Victoria outperformed other states and territories on three growth measures and exceeded the national average on six of the eight indicators. NSW and the ACT lead on two growth measures and Tasmania on one.

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