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 will need to perform over the longer run if economic growth and improved labour market outcomes are to be sustained once the housing sector slows.
The NSW economy has again been in the headlines this quarter following the release of the April CommSec ‘State of the States’ report. NSW was ranked the best-performing State economy, ahead of the Northern Territory in second. CommSec cited retail trade, population growth and dwelling approvals as key drivers of the State’s economic growth. NSW overtook Western Australia in 2014, which had long held the top economic ranking in Australia. The fading mining boom has seen Western Australia lose ground in terms of population growth, retail trade and investment.
The Reserve Bank of Australia (RBA) in the March 2015 Bulletin paper The Economic Performance of the States discussed in detail the shifting balance of Australia economic growth away from Western Australia. It specifically noted recent economic ‘developments had brought about more balanced growth across the country.’
At the time of the NSW Parliamentary Research Service October Economic Update, growth in NSW had not been consistent, nor sustained across all segments of the State economy. The State over the last two quarters appears to have consolidated its economic position and is showing more consistent growth across most sectors of the economy. Labour market indicators, however, have mostly weakened or remain unchanged for the quarter.