Which state is seeing the strongest economic growth?
Australian business activity showed signs of recovery in December, driven by Christmas demand that lifted the struggling retail sector, according to a survey released Tuesday by National Australia Bank. However, confidence among businesses remained weak amid rising costs.
The NAB survey revealed that its business conditions index rose by 3 points to +6 in December, partially recovering from a 5-point drop in November. The business confidence index, though still in negative territory, improved slightly to -2 from -3 the previous month.
Sales saw a modest uptick, increasing 3 points to +9, while profitability climbed 4 points to +4. The employment index edged up by 1 point to +4. Most industries experienced improved conditions, with the exception of transport and utilities, construction, and wholesale.
"Conditions remain strongest in services sectors," said NAB Chief Economist Alan Oster. "Most industries recorded an improvement in business conditions, with retail re-entering positive territory for the first time since November 2023."
Consumer demand had been subdued for much of the previous year as high mortgage rates and rising living costs constrained household spending.
Despite this, the Reserve Bank of Australia maintained interest rates at 4.35% throughout 2024. Market speculation now suggests the central bank may consider easing monetary policy as early as February, following signs of a slowdown in inflation.
The survey also highlighted a mixed picture for business costs. Purchase costs increased slightly in December, but labour cost growth slowed to a quarterly pace of 1.4%, even as employment conditions improved.
"The easing in labour cost growth at the same time employment conditions improve suggests that wage pressures continue to soften," Oster added.
While the December figures offer some optimism for the retail and services sectors, challenges remain as businesses navigate cost pressures and uncertain economic conditions heading into 2025.
Western Australia held off a late surge from Queensland to remain Australia’s top-performing economy in the latest CommSec State of the States report, released for September 2024. This marks WA's second consecutive quarter leading the national rankings — a feat it has achieved only twice in the past decade.
WA led in five of the eight performance indicators, including retail spending, unemployment, population growth, housing finance, and dwelling starts, solidifying its position at the top of the rankings.
Despite economic headwinds like higher interest rates and inflation, CommSec Chief Economist Ryan Felsman noted the resilience of states and territories, crediting a robust job market and strong population growth.
“As consumers respond to higher borrowing costs and price pressures, the future path will depend on whether the job market can hold up as well as the trajectory of interest rates over the coming months,” Felsman said.
Queensland climbed from third to tie with South Australia in second place, while Victoria retained fourth position, and Tasmania held steady at fifth.
New South Wales jumped from seventh to sixth, surpassing the Australian Capital Territory, which fell to seventh. The Northern Territory remained in eighth place.
WA’s dominance extended to housing, where it recorded the largest annual home price increase nationwide at 19.1%, compared to the national average rise of 4.9%. Meanwhile, Perth posted the highest quarterly inflation rate (3.8%), while Tasmania experienced the fastest wage growth (4.0%).
The report also highlighted annual growth trends for the eight major indicators. Resource-rich Queensland and WA displayed the strongest economic momentum, with Queensland ranking first or second in five categories.
Victoria showed significant improvement, moving from seventh to third place, reflecting a rebound in its underlying economic activity.
As the states continue to navigate economic pressures, WA’s consistent performance underscores its strength in key sectors, while Queensland’s steady rise indicates a competitive economic outlook heading into 2025.
