Stateometer: stars in the east

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" ANZ Research sees challenges in 2016 from slowing growth in housing activity and waning stimulus from the Australian dollar."
Kirk Zammit & Cherelle Murphy, Economist & Co-Head of Australian Economics at ANZ

The latest Stateometer provides a timely indicator of activity in each state and territory just weeks ahead of the official data for the final quarter of calendar 2015. ANZ Research sees challenges in 2016 from slowing growth in housing activity and waning stimulus from the Australian dollar, meaning the series will offer early warning signs of these potential changes.

The Stateometer showed an abrupt pick-up in the NSW and Victorian economies over the second half of 2015 with activity improving as the year concluded.

The Queensland and Tasmanian economies also performed well as their non-mining tradeable sectors responded to a lower Australian dollar in the last months of 2015. Queensland has shown positive signs from an aggregate perspective with the outlook mixed at the regional level.

South Australia, while growing at below trend pace, gained momentum. The ANZ Stateometer characterises the SA economy as in 'recovery'. There are signs the Australian Capital Territory is also improving.

In contrast to most other states, Western Australia is in the midst of adjusting from a once-in-a century boom and so continues to sit in the lower left quadrant. This suggests demand in the state is weaker than its own trend rate and decelerating as lower commodity prices permeate through the economy.

The Northern Territory is showing signs of cooling but plenty of construction activity remains for the Ichthys liquefied natural gas project.

The ANZ Stateometer is an indicator that synthesises a large volume of monthly data to provide a one-stop-shop for current state and territory economic conditions.

We've included 16 economic indicators covering labour market conditions, household and business activity and prices and analysed them using a statistical technique called principal component analysis. PCA allows us to reveal common trends in the data, and in our case, the underlying pulse of domestic economic activity for each state and territory.

Kirk Zammit is an economist at ANZ and Cherelle Murphy is Co-Head of Australian Economics at ANZ.