This paper finds that while the NSW economy is currently in a relatively strong headline position, largely off the back of the housing market, other areas of the State economy need to perform over the longer run if economic growth is to be sustained once the housing sector slows.
The NSW economy has again been in the headlines this quarter following the release of the January CommSec ‘State of the States’ report. NSW was ranked the equal best-performing State economy with the Northern Territory. CommSec cited retail trade, business investment and dwelling approvals as key drivers of the State’s economic growth. It has overtaken Western Australia where the fading mining boom has seen it lose ground in terms of population growth, retail trade and investment.
The relatively strong position of NSW was welcomed by Treasurer Andrew Constance who highlighted the contribution of housing and infrastructure to the State’s growth.
At the time of the October Economic Update, growth in NSW had not been consistent, nor sustained across all segments of the State economy. The State over the last quarter appears to have consolidated its economic position and is showing more consistent growth across most sectors of the economy. Previously weak labour market indicators appear stronger, with employment, labour force participation and job vacancies all improved for the quarter.