The ACT has maintained its position as the overall second-worst economy in Australia, though the Territory’s retail spending remains the strongest.
The ACT took the seventh position for the third quarter running in the most recent CommSec State of the States report, down from second place a year ago. In terms of economic growth, the ACT ranked fifth out of eight.
The report measures the performance of states and territories across eight indicators: economic growth, retail spending, equipment investment, construction work, population growth, housing finance and dwelling starts.
CommSec Chief Economist Craig James said the ACT’s performance across the report’s eight indicators was trending “more towards the bottom”, coming in seventh place on four indicators.
Mr James said this wasn’t so much a matter of the ACT’s economy being weak but more that other states and territories were doing relatively better.
He also pointed out that “it doesn’t take too much to shift the economies one way or another”, particularly the ACT and NT, as they are relatively small.
Mr James noted that the ACT has typically had a strong job market, a “key factor” in its economic stability.
While the ACT’s unemployment rate edged upwards from its low of 2.9 per cent to 3.4 per cent in September 2023, it’s still 11.4 per cent lower than the decade average.
“The ACT is pretty much close to full employment but has pushed away from record lows,” Mr James said.
“Certainly, the continued low level of unemployment has created the ammunition for the ACT to do a bit of retail therapy,” he added.
The ACT remained the best-performing jurisdiction for real retail trade for the second quarter running.
Mr James said retail spending was where the ACT really outperformed.
“If you look across the indicators, retail trade is really where the ACT stands out,” he said.
While interest rate hikes and cost of living pressures have caused many households to cut their retail spending, real spending in the ACT was up 14 per cent from the decade average as of June 2023, and the Territory has the fastest annual growth of real retail trade of any jurisdiction in Australia.
“Despite the rising cost of living and negative real wages, retail spending remained above the long-term average in all states and territories in the June quarter,” the report said.
According to CommSec’s most recent data from August 2023, annual spending growth was the fastest in the ACT (up 5.5 per cent), followed by Western Australia (up 4.0 per cent) and Northern Territory (up 2.8 per cent).
Regarding annual growth of actual retail trade, the ACT is the strongest at 2.1 per cent, ahead of South Australia (1.1 per cent) and Western Australia (0.5 per cent).
However, according to CommSec, the ACT’s main weakness was its relative population growth.
The ACT’s population growth rate of 1.96 per cent remained unchanged from its decade average, behind Western Australia (2.82 per cent), Victoria (2.45 per cent) and Queensland (2.35 per cent).
Mr James said other capital cities have benefitted more from migration in recent years.
“Migration coming through to places like Sydney and Melbourne has boosted their economy through population growth, job creation and knock-on effects,” he said.