South Australia named top-performing economy for first time in 15 years

Strong employment and economic growth are buoying South Australia's economy, a new report finds.

Strong employment and economic growth are buoying South Australia's economy, a new report finds. Photo: Getty

South Australia has for the first time been named as Australia’s top-performing economy, with CommSec’s State of the States report praising its strong jobs market and construction sector.

In a report released on Monday, CommSec chief economist Craig James said strong population growth and employment were buoying Australia’s states and territories, but that rising interest rates have slowed momentum heading into 2024.

South Australia has emerged as the strongest performer against that backdrop, he said, while Victoria and New South Wales are now tied for second place.

“Population growth in South Australia has tripled over the past two years, which is showing up in a strong housing market and overall economic activity,” James said of South Australia’s strength.

“However, South Australia can’t rest easily. It is likely the state will face challenges from NSW and Victoria in the period ahead.”

Western Australia placed fourth in the latest rankings, posting the highest relative population growth in the nation, while Tasmania managed fifth spot, supported by strong equipment spending.

The ACT scored sixth, while Queensland – Australia’s third largest state – ranked seventh.

Source: CommSec (click to enlarge).

South Australia tops the rankings

It’s the first time South Australia has ranked No.1 in the 15-year history of CommSec’s State of the States report.

It managed the feat on the back of nation-leading real economic growth, which measured 9 per cent higher than four-year averages in the September quarter of 2023, beating NSW at 8.3 per cent.

That growth has been underpinned by South Australia’s jobs market, which also leads the nation with a jobless rate of 3.8 per cent in December, which is 36.5 per cent below decade averages.

Construction activity in the state is also leading the country, with the sector running 23.4 per cent above decade averages – compared to the 18.3 per cent above posted in NSW.

Victoria and NSW tied for second

Australia’s two largest states tied for second, with neither leading the nation in any category of economic success defined in the report but instead remaining in the top portion of performers.

For example, NSW scored second for construction activity and dwelling starts, while Victoria achieved silver in equipment investment and employment growth measures.

NSW also nearly matched South Australia for real economic growth, with rates about 8.3 per cent ahead of four-year averages, compared to 7.4 per cent across Victoria.

But both NSW and Victoria have been hit hard by Australia’s ailing consumer economy, with retail spending growth across both states falling backwards in annual terms for the quarter.

Western Australia in fourth

Australia’s westernmost state has the strongest relative population growth in the nation, but has lagged behind on construction activity for the quarter, landing it in fourth spot on the rankings.

It leads other states and territories on annual growth rates for three of the eight indicators measured by the State of the States report.

Western Australia also has the nation’s “strongest economic momentum”, according to the report, which bodes well for its ability to increase its rankings in future reports throughout 2024.

But in terms of real economic growth the state struggled, recording the slowest rate in the nation (up 0.7 per cent), which was down 2.2 per cent on four-year averages.

Tasmania falls to fifth

Tasmania, which led the nation in the report at several points throughout last year, has fallen to fifth in the latest rankings, stymied by weak population growth compared to other states and territories.

There are still bright spots, however, with Australia’s southernmost territory ranking first on equipment spending and second on dwelling starts behind first-placed South Australia.

ACT in sixth spot

Australia’s capital territory had the strongest retail spending in the nation over the quarter, with consumers overcoming cost-of-living pressures and negative real wages growth.

Real spending was 13.5 per cent higher in the ACT in the September quarter than decade average levels, the report found.

Canberra was held back, however, by relatively weak equipment spending and employment growth that was slightly behind decade averages.

Queensland sits seventh

Queensland is Australia’s third largest state economy, but it ranked second last in the performance rankings over the September quarter.

Its strength was housing finance (excluding refinancing), which led the nation up 24.6 per cent on decade averages.

But real economic growth was relatively weak, up 4.5 per cent on longer-term averages for the period.

Northern Territory last in eighth

The Northern Territory has been buoyed by relatively strong population growth recently but has struggled on other measures, including retail spending and real economic performance.

In fact, economic growth in the NT was 2.2 per cent below the four-year average, which is the worst performance by any state or territory across the country by a significant margin.

The territory also placed last on other measures including equipment spending, employment and construction work.

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