NSW's above trend economic growth, but signs of weakness: ANZ

New South Wales continues to grow at an above-trend rate according to the ANZ’s Stateometer, but momentum has eased further and growth may soon be back at trend.

The Stateometer suggests that Victoria’s economy is growing at a slightly above-trend rate. Queensland’s growth has stabilised at a well-below trend rate, fully unwinding the significant improvement in late 2015. Growth in Western Australia remains very weak, with the recent small improvement unwound. 

The Northern Territory is also growing at a below-trend rate, but momentum has improved over the past months.  Tasmania and South Australia are both growing at near-trend rates. Growth in the Australian Capital Territory has accelerated and it is now well above trend.

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Regional Overview

New South Wales

NEW SOUTH WALES GROWTH SLIDES FURTHER AND MAY SOON BE BACK AT TREND

• The smoothed New South Wales index remains positive, suggesting economic activity is expanding at above trend pace.
• However, the index continues to fall from the thirteen-year high reached in 2015, reflecting a broad slowdown in the underlying indicators.
• Given the weakness in the Stateometer’s components, we see a risk that the smoothed index falls further in August, where growth may soon be back at trend.

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Victoria

VICTORIA CONTINUES TO GROW AT AN ABOVE- TREND PACE

• The Victorian index suggests that the state’s economy is still expanding at a slightly above-trend rate, with the main driver of growth being the buoyancy of the labour market.
• Unless the strength in the labour market translates into higher spending, we think that a significant improvement in the smoothed index is unlikely.
• The underlying statistics suggest that the smoothed index will be little changed in August.

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Queensland

QUEENSLAND'S ECONOMY REMAINS WEAK

• Queensland’s economic growth has been steadily decelerating over the past few months and is now well below trend. This means that the index has fully unwound the significant improvement in late 2015.
• The fall in the smoothed index reflects a broad- based slowdown in the underlying series, with the weakness in the labour market being the prime driver.
• The underlying data suggest to us that there is a risk that growth will stay weak in August.

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South Australia

SOUTH AUSTRALIA IS NEAR TREND GROWTH

• The smoothed index for the South Australia’s economy has risen further and is almost at the zero mark signifying trend growth.
• The significant improvement in labour market conditions over the recent months has supported the rise in the smoothed index.
• Meanwhile, the underlying data suggests to us some upside risks for growth in August.

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Western Australia

WESTERN AUSTRALIA’S SMALL GAIN PROVES SHORTLIVED

• The recent small gain in the smoothed index for Western Australia has been unwound and the Stateometer remains close to the seven-year low reached in January, indicating well below trend pace growth.
• The weakness in the underlying data is broadly based.
• Based on the underlying data, we see little change in August.

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Tasmania

TASMANIA’S GROWTH BROADLY STABILISES AT A NEAR-TREND RATE

• Tasmania’s economic growth has improved slightly over recent months and has stabilised at a rate that is just below trend.
• As the labour market remains weak and slowed further in July, we see a risk that the earlier improvement may be partly unwound.

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Northern Territory

THE NORTHERN TERRITORY’S MOMENTUM CONTINUES TO IMPROVE

• After reaching a five-year low in April, the territory’s smoothed index has improved slightly. This suggests to us that growth in the Northern Territory may have passed a turning point.
• The more positive momentum has been driven by improvement in the labour and household sectors.
• Reflecting the underlying data, we see little change in August.

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ACT

THE ACT'S GROWTH ACCELERATES

• Economic activity in the Australian Capital Territory is growing at an above-trend rate and accelerated sharply in July, with the smoothed index being at its highest level since February 2011.
• The key contributor to the improvement in the index remains the buoyancy in labour market conditions.
• The underlying data suggest that the Stateometer will improve further in August.

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