New South Wales has performed strongly and is closing the growth gap on the mining dependent States such as Western Australia, according to this paper.
The Australian economy is continuing to show signs of recovery, underpinned by strong growth in resource exports. Activity related to the household sector has also picked up, buoyed by the low level of interest rates and the associated strengthening in housing prices. However, further declines in mining investment and planned fiscal consolidation appear to be dragging on growth at a national level.
NSW has again performed strongly across a number of key economic indicators for the quarter, as it closes the growth gap on the mining dependent States such as Western Australia.
Economic growth in NSW continues to be underpinned by the resurgence in the housing sector. Improved property prices, particularly in Sydney, have provided the stimulus for demand and consumption growth, and have resulted in an expansion in building approvals across the State. Dwelling approvals in the March 2014 quarter were 46 per cent higher than the previous year and up 31 per cent for the month of May.
The upward trend in building approvals will help other segments of the economy. According to the Commonwealth Bank, building multipliers are among the most robust in the economy; having positive impacts on demand, retail spending and employment. All levels of government will benefit from more construction, jobs and tax revenues. The expansion in residential housing supply also has the dual benefits of restraining house price inflation and assisting the transition away from the mining sector by stimulating other areas of the economy.
The turnaround in the NSW economy has also been characterised by strong retail sales growth. Average turnover of retail trade in NSW rose by 3.5 per cent in the March 2014 quarter to $7.2 billion and was 8 per cent higher than the previous year; this was the highest average quarterly growth of the other States and Territories.
The NSW labour market has remained relatively positive, with the average unemployment rate unchanged over the June quarter at 5.6 per cent. The average number of people employed in NSW also rose by 0.4 per cent, while the average labour force participation rate increased marginally to 63.1 per cent. The number of job vacancies also increased by 2 per cent over the latest quarter to 50,600; the highest figure for NSW since February 2012 and above the 10 year average of 47,300.