Low unemployment and migration keeping Australia afloat, but inflation must subside: CommSec

Australia’s economic performance remains robust across all states and territories, driven by low unemployment and high migration, according to CommSec.

This comes in the bank’s latest State of the States quarterly report.

Breaking down eight separate indicators, the bank seeks to give a health check on each of the eight jurisdictions that make up Australia (not including the oddity that is the ACT’s Jervis Bay territory).

If you add up the growth of all eight indicators together from a YTD point of view, Western Australia – the nation’s engine room – is at the head of the leaderboard.

WA wins wages, SA loses inflation

WA also leads the board for the fastest rate of population growth. Perhaps unsurprisingly, WA now wins the wage growth race, clocking the nation’s highest at 4.2 per cent.

South Australia is left with the hard job of boasting the nation’s highest inflation rate at 5.9 per cent.

Queensland, meanwhile, remains the best place for home loans. Consider that the Bank of Queensland (ASX:BOQ) is the bank most exposed to mortgages in the country.

Nationally, home prices rose by 3.9 per cent across the quarter – which actually reflects a slowing down, much to the relief of everybody on the wrong side of the homeowner divide.

For Q3, economic growth goes to Victoria. But more on that in a moment.

Things aren’t all rosy

Conversely, though, the bank’s analysis division also notes cracks are beginning to show in our national economic health.

How Australia’s performance continues through 2024 depends on tackling inflation, the bank today reported.

Without saying it directly, CommSec has added its weight to the chorus calling for a November rate rise, following hot Australian inflation data last week, and hot retail spending this morning.

What the numbers mean

CommSec measures state-by-state real economic activity by assigning a value above the four-year average level of output.

The last four years have been far from “normal”, which should be factored in.

The three major East Coast states are in the lead. But the story is marginal, and in fact, the entire East Coast is running an incredibly close race.

Victoria Q3 is the place to be

By CommSec’s Q3 calculations, Victoria’s economic activity clocked in at 7.7 per cent; nearly equal with NSW at 7.6.

QLD, the third runner-up, comes in very close at 7.5 per cent.

Fourth is South Australia at 7.0; the ACT is 6.3. Then there’s a drop in the Q3 data.

Western Australia – the resources powerhouse of the entire country – only clocked 3.2 per cent economic activity growth in Q3, according to CommSec’s numbers.

It’s followed by TAS at 2.9 and the NT came in last at 1.4 per cent.

CommSec notes that its own criteria naturally disadvantages the NT’s small economy, that state being home to what is probably Australia’s most overlooked capital.

WA wins population growth, too

CommSec’s Q3 data, with a view to population growth – shows that Western Australia is at the top of the leaderboards.

Migration is generally beneficial for a destination country’s economic growth, with fears of job theft aside.

However, the trend could cause problems in the Australian state where rental vacancies are dipping in and out of being the lowest nationally.

That has bad implications for state (and national) inflation, which CommSec has noted continues to threaten the good economic tidings of our proud nation.

How exactly anyone is meant to solve that remains everybody’s guess.

CommSec noted in its assessment of economic weaknesses for WA that low construction activity remains our greatest spectre.