State of the States – How Each State Is Performing

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Hello everyone!

Hope we are all keeping well during these trying times.

We just heard this evening that Victoria will go into stage 4 lockdowns this week.

These tough new restrictions will be an enhanced form of social distancing, and expected to last for at least the next 6 weeks.

It involves 8pm curfews, closure of non-essential businesses and school students going back to home learning.

“Gulp”

Godspeed our Victorian cousins.

Closer to home, all I have to say is:

NEW SOUTH WALES ARE WE WATCHING?

Why the state government is still taking a reactive approach… is beyond comprehension.

Why not lock us down so we can get on top of this, or at the very least – enforce mandatory mask wearing (like in Victoria)?

“Shakes head”.

It’s like watching a car crash in slow-motion, except you’re sitting in the passenger seat.

Sigh… rant over.

Anyway, with everything that’s going on around the nation – I wanted to see what was going on with the different state economies.

And one of the best resources is the Commsec State of the States Report

Each quarter for the last 11 years, CommSec analyses eight key indicators for each state:

Economic growth; retail spending; equipment investment; unemployment; construction work done; population growth; housing finance and dwelling commencements.

And then ranks each state accordingly.

I’ve always found it incredibly helpful, because it provides a wonderful breakdown of how the Australian economy as a whole is tracking in real-time (minus a couple of months).

Here are all the states and how they rank for each metric:

Key highlights:

For the first time since 2009, Tasmania is the best-performing state, followed by Victoria, the ACT and NSW.

And unsurprisingly, Tasmania also had the lowest jobless rate during COVID.

The chart below shows the % change on the decade-average. So Tasmania’s unemployment rate is only 7.4% above it’s decade average.

Whilst WA’s job market has been severely impacted by COVID, with a 63% increase on it’s decade average.

Population growth is an important influence on the national economy, especially on retail spending and on housing demand.

Because without people… nothing really happens does it?

However, what the chart below doesn’t show is that only Tasmania and South Australia have population growth above the long-term averages.

Indeed, the Victorian annual population growth of 1.99% is the slowest rate in 8 years and NSW’s population growth is the slowest in 7½ years.

Another closely watched metric, is housing finance.

This is because housing finance is a leading indicator for consumer sentiment, real estate activity and housing construction.

Also, given our obsession with property and buying our own – it is also a useful indicator of activity in the financial sector for home loans.

In 5 of the states and territories, home loan applications are above decade averages, with ACT home loan values up 31%.

It kinda makes sense, because the ACT has been arguably least affected by COVID.

Given it is our nation’s capital – and has the benefit of legions of public servants, who are now more than ever, working hard on ensuring our nation comes through the other side.

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I think the Commsec State of the States Report is one of the most insightful rolling analyses on the Australian economy.

If you’ve just found out about it, and want to stay informed, then please get it in your inbox!

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