Western Australia has topped CommSec’s ‘State of the States’ report for the third quarter in a row, with the paper highlighting the WA Government’s focus on economic output, job creation, diversifying the economy, supporting businesses and building more things in Western Australia.
The State of the States report determines which Australian state or territory economy is performing best by tracking eight key economic indicators and comparing the latest observations with decade averages.
Western Australia leads the nation on five of the economic metrics including retail spending, relative unemployment, relative population growth, housing finance and dwelling starts, while Victoria has leapfrogged into second place (up from fourth) – ahead of both Queensland and South Australia.
Beginning its State of the States hat-trick in the October 2024 edition of the report, Western Australia claimed the top spot for the first time since July 2014.
Chief CommSec Economist Ryan Felsman said Western Australia performed strongly across multiple economic indicators, as ‘The West’s’ strong relative population growth has boosted labour and housing markets, encouraging consumers to spend.
“Overall, the economic performance of Australia’s states and territories is being supported by a strong job market, robust government spending and solid population growth at a time of higher cost-of-living pressures,” said Felsman.
“Economic growth has slowed however, as consumer spending remains subdued due to still-elevated borrowing costs. As we look ahead, an expected reduction in interest rates could boost economic sentiment in the mortgage-sensitive states of New South Wales and Victoria, while the interplay between interest rate cuts, federal election outcomes and global trade dynamics will be crucial in shaping the economic outlook.”
The report revealed that Victoria led on construction work, while Queensland slipped one spot but performed well across housing finance, dwelling starts and retail spending indicators.
South Australia dropped from equal second to fourth position on the leaderboard, held back by lower rankings on economic growth, equipment investment and relative population growth.
Tasmania stayed steady in joint fifth spot – leading on equipment spending – while NSW moved up to equal fifth from sixth position, ranking first on economic growth.
The ACT remains in seventh place and the Northern Territory stays in eighth place, but CommSec says the decade-average method of assessing economic performance disadvantages the ‘Top End’, due to significant LNG construction between 2012-18 that inflated a range of economic indicators.
When it comes to annual growth rates across the eight major indicators (enabling comparisons in terms of economic momentum), commodities and tourism-heavy Western Australia continues to outperform the rest of Australia, once again ranking first in five of the eight economic indicators.
Queensland slips from first to second place but is supported by its housing market and interstate migration, while Victoria is currently benefiting from solid retail spending, construction activity and inbound overseas migration.
WA Premier Roger Cook said the report confirms Western Australia’s place as the engine room of the national economy.
“We want to keep it that way by working closely with our resources industry, making more things here and diversifying our economy for the future,” he said.
“While we will continue to play our part in maintaining Australia’s prosperity, we know some people are still being affected by global headwinds like inflation.
“That’s why my government will remain focused on investing in health and building more houses while continuing to grow WA’s economy.”
