Victorian Economy Tops State of the States Rankings

Strong economic activity, solid retail spending and business investment have catapulted Victoria from fifth to number one in the latest CommSec State of the States report.

The state also recorded its highest population growth in almost seven years, according to the October report.

Victoria’s status as the nation’s best-performing economy comes after it ranked fifth in the previous report.

However, there was little to separate the top six economies with South Australia now ranked second, up from third, followed by NSW, Queensland, Western Australia, Tasmania, the ACT, and the Northern Territory.

The CommSec State of the States report, a quarterly ranking of economic performance, uses the latest available information to provide an economic snapshot of each state and territory by comparing eight key indicators: economic growth, retail spending, equipment investment, unemployment, construction, population growth, housing finance and home starts.

According to CommSec, the report has an extra focus on annual growth rates for the eight indicators to highlight economic momentum. This data highlights the scope for Australia’s economies to lift on the economic performance leader board in future surveys.   

CommSec chief economist Craig James said Victoria had improved its ranking on four of the eight indicators.

“Economic activity in Victoria in the June quarter was 7.7 per cent above its four-year average level of output and equipment investment was at record highs, up 19.7 per cent on the decade average,” he said.

“While the lift from fifth to first is surprising, we knew coming into this quarter there was little to separate the economic performance of the states and territories.

“We expect Victoria to face challenges from the other economies in the period ahead.

“Looking at the other states and territories, the report also highlighted strong economic momentum from Western Australia as it leads on annual growth rates.”

Victoria remained in the top spot for construction work done, up 19.7 per cent above its decade average, and ahead of Tasmania (up 18.1 per cent).

Queensland has the strongest level of value of home loans, up by 15.3 per cent on the long-term average.

Next strongest was SA (up 14.9 per cent), ahead of Tasmania (up 10.4 per cent) and WA (up 10.2 per cent).

Tasmania remains in top position on home starts—4.8 per cent above the decade average. Queensland is now in second spot, with starts 9.8 per cent below ‘normal’ (the decade average). NSW is in third with starts down 12.5 per cent on the decade average, from SA (down 16.4 per cent on normal).

State of the States, October 2023

▲ Souce: CommSec State of the States October 2023

Across the report’s eight key indicators:

• Victoria ranked first on relative economic growth and construction work.

• South Australia ranked first on relative unemployment.

• Queensland ranked first on home loans.

• Western Australia ranked first on relative population growth.

• Tasmania ranked first on equipment spending and home starts.

• The ACT ranked first on retail spending.

• NSW ranked second or third on four of the eight indicators.

• The Northern Territory ranked fourth on relative population growth.

The report also found WA had the strongest economic momentum, with NSW, Victoria and Queensland tied for second.

Victorian treasurer Tim Pallas underlined rising employment due to the state’s economy.

“The near-record number of Victorians in work is the product of a strong economy that is providing confidence for businesses to hire new workers,” he said.

“Robust economic activity means there are opportunities for existing workers and young people entering the jobs market for the first time.”