NSW and Victoria lead the nation on economic performance, both riding an X-factor

NSW is the top-ranked state economy in Australia, sitting at or near the top on a range of economic indicators used to measure economic performance of the states and territories, according to a report released on Monday.

But Victoria, which holds second spot overall on the latest CommSec scorecard known as "State of the States," leads in the areas of construction work and population growth and (like NSW) has a pipeline of major infrastructure projects underway or expected that will help power its economy over coming years.

NSW leads the pack on retail trade, equipment investment and dwelling starts, with the latter a massive 56 per cent above the decade average in the June quarter. NSW's economic health is also reflected in a jobless rate of 4.6 per cent, which CommSec says is more than 10 per cent below its decade average and gives it, arguably "the strongest job market in the nation".
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But the smaller of the country's two most populous states appears to be "chipping away" at NSW's overall economic lead.

"It's the south-eastern areas of Australia that look as though they're dominating at the moment. It's still NSW and Victoria firmly out in front," said CommSec chief economist Craig James.

"If anything, Victoria is slowly chipping away at NSW's lead, and we can't rule out the fact that Victoria could be the best-performing economy in the nation in the next year or so.

"Both NSW and Victoria have in common strong population growth, which is creating demand for homes. And if you're creating demand for homes you need more builders, tradesmen, architects and the like, and they've got dollars in their pockets and they spend through the economy.

"So every economy has got to have that X-factor to drive growth and very much NSW and Victoria have got that in terms of population growth."

Mr James said the nation's domestic economies were "in good shape", but there were "some differences in relative performance".

The ACT, which is home to Federal Parliament, thousands of federal public servants and a strong university sector, is ranked third, despite a softening jobs market.

"Then there is a gap to South Australia, Tasmania, Queensland and the Northern Territory, then another gap to Western Australia," the report says.

The research says "Western Australia continues to lag other economies and annual growth rates remain below national averages on seven of eight indicators surveyed".

The report says NSW recorded the strongest retail spending in the June quarter, with spending 16.9 per cent above the decade average. While in Victoria, retail spending for the quarter was 15.2 per cent above the decade average.

NSW also recorded the strongest result in terms of business investment for the quarter, being the only state to record business spending above its decade average level. In NSW business investment was five per cent greater in the June quarter than the decade average.

NSW Treasurer Dominic Perrottet said the state's "massive infrastructure agenda is only just warming up, with more jobs and economic activity to come to ensure our communities have the services they need".

Mr Perrotet also said: "What sets NSW apart is its disciplined approach to reforming and investing. We inherited a state that used to sit at the bottom of the table on multiple indicators but we stayed focused year after year and this ranking is the result of that hard work."

Victorian Treasurer Tim Pallas said: "This data confirms yet again that Victoria's economy is in good hands - growing strongly and creating jobs."

He also said: "Household consumption, business investment, dwelling investment and the Labor government's record infrastructure investment are all solid contributors to Victoria's economic resurgence."

Mr Pallas said "construction in Victoria is the strongest it's been in seven-and- a-half years. The Andrews Labor government has worked tirelessly to restore Victoria to its rightful place as Australia's economic powerhouse".

This story NSW and Victoria lead the nation on economic performance, both riding an X-factor first appeared on The Sydney Morning Herald.