The Australian state economy outperforming the rest for the first time in a decade
The top state took first place on three key economic indicators while one east coast state languished near the bottom of the table
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For the first time in a decade, Western Australia has the best performing economy in the country, new data has revealed. CommSec’s State of the State report showed the state held the top position this quarter in three of the eight economic indicators — retail spending, relative unemployment and relative population growth.
By contrast, the eastern states languished, with Victoria taking fourth position and NSW in seventh position, just ahead of the Northern Territory economy. The report said persistently high borrowing costs, based on interest rates maintained by the RBA to curb inflation, were having a negative impact on the rate sensitive NSW market.
This looks unlikely to change in a hurry with the report also examining annual growth rates across the eight indicators. It found WA has the strongest growth momentum, followed by Queensland, which is fuelled by strong relative unemployment figures and housing finance. The economic outlook for the Northern Territory is also positive given it now sits in second place on three economic indicators.
Western Australia edged out South Australia as the top performing state economy, after two quarters in first position.
Chief CommSec Economist Ryan Felsman said the resilient job market and steady population growth was continuing to underpin all state and territory economies.
“However, an extended period of elevated interest rates to counter persistent inflation is pressuring consumers and slowing economic momentum,” he said. “The path forward will largely depend on the ongoing strength of the labour market, trajectory for monetary policy and China’s economic recovery.”
While WA’s strong performance was based on ‘robust economic fundamentals’, Mr Felsman said the other states and territories were not far behind.
“WA is well positioned for sustained future performance; however, the competition remains intense, particularly among the top three states with Queensland moving quickly up the rankings,” he said.
CommSec is the digital broking arm of the Commonwealth Bank, Australia’s largest mortgage lender. It assesses the performance of each state and territory on a quarterly basis using eight key indicators including economic growth, retail spending, equipment investment, unemployment, construction work done, population growth, housing finance, and dwelling commencements.
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The bank posted unaudited cash earnings for the quarter of A$1.7 billion, down 2% on the average of its prior two quarters
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National Australia Bank said that higher credit impairments against business loans contributed to a small fall in its unaudited December quarter cash earnings.
NAB , which is Australia’s second-largest bank by market capitalization, on Wednesday posted unaudited cash earnings for its fiscal first quarter of 1.74 billion Australian dollars, equivalent to about US$1.11 billion.
That was down 2% on the average of its prior two fiscal quarters. NAB did not give a year-earlier comparison.
The lender said that revenue grew by 3% compared with the average of its prior two fiscal quarters. Underlying profit growth of 4% over the same period was offset by higher credit impairment charges and income tax expenses, it added.
NAB, which posted an unaudited quarterly statutory profit of A$1.70 billion, said the A$267 million credit impairment charge included A$152 million of individually assessed charges. Those were mainly against Australian businesses and unsecured retail portfolios, it said.
The individual charges were up by 54% compared with a year earlier. NAB said that it had not altered its economic assumptions and scenario weightings.
“The economic outlook is improving but cost of living and interest rate challenges persisted,” Chief Executive Andrew Irvine said. “While most customers are proving resilient, we have maintained prudent balance sheet settings.”
NAB said it had seen a small decline in net interest margin due to funding costs, lending competition and deposits, partially offset by the benefit of higher interest rates.
On Tuesday, the Reserve Bank of Australia cut the country’s cash rate for the first time since 2020 but warned against expecting subsequent near-term cuts.
NAB is still targeting full fiscal-year productivity savings of more than A$400 million, and for operating expenses to grow by less than 4.5%, Irvine said.
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