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Queensland outperforms other States in 2023/24
This week, the ABS released data confirming how the various Australian States performed over 2023/24. Across the States, the Queensland economy was the standout, growing by 2.1% and outperforming all other State economies.
New South Wales (1.2%), South Australia (1.2%) and Western Australia (0.5%) underperformed the national average growth rate of 1.4%, while Victoria (1.5%) and Tasmania were in line with the national average at 1.4%. The ACT and Northern Territory should receive special mention as these two small Territories outperformed their larger State siblings growing by 4.0% and 4.6% respectively.
Queensland’s strong performance was underpinned by exceptional population growth, averaging around 0.5 percentage points higher than the national average over the past three years. International and interstate migrants were attracted to the State by employment opportunities and lifestyle considerations. Queensland employment growth (3.0%) outstripped the national average (2.8%) by 0.2 percentage points.
A strong labour market lifted growth in household real disposable income to 2.8%, which was above the national average of 0.8%. Queensland’s real disposable income growth was in stark contrast to its east coast neighbours, New South Wales and Victoria, who eked-out growth rates of just 1.1% and -0.7%, respectively.
Backed by robust growth in disposable incomes, the Queensland and Western Australian households had healthy spending growth rates of 2.2% and 3.1%, respectively. In contrast, NSW and Victorian households were forced to tighten their belts. Household spending in these States fell short of the national average of 1.1%, at rates of 0.6% and 0.2%, respectively.
Turning to the housing market, the difference in trends in consumer spending aligns with the divergence across States in house prices over the last year, with Brisbane (13%) and Perth (23%) outpacing Melbourne (-2%) and Sydney (4%). However, the sharp increase in house prices has come due to restricted Queensland housing supply, where declining affordability and high building costs have weighed on residential construction.
Although all States and Territories except Western Australia have seen falls in housing construction since 2021/22, Queensland has underperformed, down by 7% over the last two years compared to a fall at the national level of 5%. On a brighter note, recent higher frequency data indicate the emergence of green shoots for the sector, with Queensland dwelling investment up by 4% in the June quarter and building approvals data showing signs of improvement.
Moving away from households to the business sector, it is the Western Australian economy that shines, with rates of growth in investment in 2023/24 more than double the national average. Impressively, WA has recorded an expansion in business investment for 5 consecutive years, which includes the COVID period.
While strong consumption and investment drove Western Australia to record the strongest growth in State final demand (a measure of domestic spending) of 5.8% in 2023/24, its GSP (GSP, a measure of domestic and foreign spending, and hence the broadest measure of State economic activity) underperformed, growing by just 0.5%. This was due to weather-related problems affecting iron ore production and shipping.
WA goods export volumes, declined by 3.6% in 2023/24 following a 2.1% decline in mining production. Queensland suffered similar weather-related setbacks in 2022/23, which reduced mining production by 4.9% and goods exports by 5.4%.
However, this year the sector has bounced back strongly, with a 5% recovery in Queensland mining production and an 11% recovery in goods export volumes. The recovery in the mining sector, along with strong consumer spending was enough to drive Queensland economic activity to the top place across Australia’s States over 2023/24.