Western Australia has the strongest economy of all Australian states, a new report shows.
The June CommSec State of the States quarterly report has shown that Western Australia is leading the rest of the states with respect to economic growth.
The report takes into account eight key indicators, namely economic growth, unemployment, retail spending, equipment investment, construction work done, housing finance, dwelling commencements, and population growth.
The state’s economic lead owes largely to the strength in its mining and engineering sectors driving exports and commercial construction. Western Australia has displaced the Australian Capital Territory as the strongest state economy in Australia. In the second place, the Capital Territory’s economy is still strong, bolstered by housing and commercial construction.
Western Australia has also shown to have the strongest growth in retail spending, although the report also demonstrates weaknesses in housing, with new dwellings falling 10% on the decades average, and house prices dropping by an average of 7.5% over the past year.
New South Wales and Queensland were found to be in the worst positions, although the report asserted the latter is likely to see improvement arising from construction activity in the wake of recent disasters.
It was suggested that the New South Wales economy would likely benefit from high population growth and stable housing lending. The report also asserted that stability in interest rates could see improvement in both of the poorest performing state economies.
“An extended period of interest rate stability could provide the momentum that NSW and Queensland economies both need – injecting interest in the housing sector,” it said.
Although it is expected that Western Australia will continue to show confident growth in the strength of its resources, the report noted that the spoils of the state’s economic growth were not being shared equally amongst its residents.
“Provided China continues to grow then the Western Australian economy will continue to thrive,” it said.
“But just as the broader Australian economy is multi-speed, so is the situation in Western Australia. Mining areas are thriving but weaker housing activity is creating challenges in Perth and non-mining regional towns.”