The Australian Capital Territory continues to have one of the strongest economies in the nation, according to an economic performance report by the  Commonwealth Bank.

 

According to the Commonwealth Bank's latest State of the States: State & Territory economic performance report the ACT lead the states in economics, however the gap with rest of the nation has narrowed.

 

The report states the “ACT economy may be small, but it has demonstrated that it is more rounded than many other states or territory economies".

 

Dwelling construction, new home loans and population growth in the ACT were all reported to be above decade averages and ahead of other jurisdictions.

 

The states were assessed on eight key indicators of economic growth, retail trade, equipment investment, unemployment, construction work done, population growth, housing finance and dwelling commencements.

 

The Western Australian economy had also been an outperformer but it has slipped back to the pack. While construction work is the clear driver, population growth has slowed, dragging on the housing sector. Unemployment is low compared with other states but it has been drifting higher.

 

There is little to separate Victoria, South Australia, Northern Territory, Tasmania and NSW. Certainly NSW has been a major improver over the last quarter led by above-average population growth and firmer business investment. But both the Queensland and NSW suffer from weak housing markets – the only two economies where dwelling starts are below decade averages.

 

The Victorian economy has the strongest housing market of the state economies. In fact, dwelling starts are 20 per cent above decade averages while housing lending continues to grow, in contrast to the other states. The area of relative weakness is the job market where Victorian unemployment is slightly above decade averages, in contrast to other states where it is lower.

 

The South Australian economy is supported by historically-high population growth, underpinning activity across a number of sectors. Overall construction work is almost 47 per cent above decade averages, with current annual growth second only to the ACT, up 20 per cent.

 

The relatively small Northern Territory economy continues to be underpinned by very low unemployment together with firm retail spending. The unemployment rate of 3.1 per cent remains well below the 4.9 per cent decade average. The areas of under-performance are construction work, which has slowed markedly since early 2009, and housing finance.

 

The performance of the NSW economy continues to be restrained by the construction sector – both new homebuilding as well as commercial and engineering activity. But high population growth relative to decade averages points to the need to build more homes in coming quarters. Business investment in equipment and machinery is strongest in NSW of the states & territories – either compared with ‘normal’ levels or annual growth rates.

 

In Tasmania, the areas of strength are relatively-low unemployment and above-average dwelling starts while retail spending and business investment tend to lag behind other states and territories.

 

The performance of the Queensland economy continues to be hampered by historically-low population growth, affecting building and construction activity. But business investment in plant and equipment is 28 per cent above longer-term averages and spending in the latest quarter was over seven per cent higher than a year ago. And rebuilding activity following the floods will substantially boost construction activity in coming months.