Construction key as Victoria struggles back from COVID

Construction activity is the Victorian economy’s saving grace as it struggles to bounce back from months of lockdown, a new report reveals.

Melbourne’s Bourke Street Mall almost deserted during a lockdown. Picture: Andrew Henshaw

Victoria is tied in equal last place for annual economic growth in that latest quarter among Australia’s states, a new report shows.

CommSec’s quarterly “State of the States” report shows the annual rate of economic growth in Victoria running at -4.3 per cent, the same as in NSW, but the state placed mid-pack fourth among the states and territories when assessed against its “normal”, decade average economic performance.

The state’s massive construction projects keep the economy humming along, but a relatively high rate of unemployment and subdued population growth will weigh heavily in 2021.

Victoria’s construction work was up 17.5 per cent on its long-term average, but down 3 per cent on an annual basis, CommSec reported. The value of home loans in the state was up a nation-leading 87.7 per cent on its long term average, and 50.2 per cent annually.

But on other measures, Victoria was well off the pace, with population growth down more than 65 per cent on the long term average and running at just 0.71 per cent on an annual basis.

Picture: Supplied

The latest State of the States report reveals the mixed outcomes of the COVID economy, with larger states like Victoria, NSW and Queensland seemingly suffering more from the drop off in migration and restricted movement around the country brought on by COVID>

Neither Victoria nor NSW notched up the best improvement across any category measured in the CommSec report.

Compared to long term trends, Tasmania leads the economic ladder thanks to its strong population growth from a low base as many Australian’s flock to the Apple Isle, CommSec reported.

Both Victoria and NSW are feeling the weight of the unemployment bump brought about in the early days of the pandemic.

The Victorian economy, which struggled through months of lockdown, is now dealing with unemployment 6.2 per cent above the decade average.

NSW, while not immune from the effects of the virus has only had to grapple with joblessness 2.3 per cent above the decade average.

Picture: Supplied

All states, except Victoria, had real positive wage growth in the December quarter.

Across the year Victorian wages and consumer prices rose 1.3 per cent.

Strong retail spending across the board has buoyed Australia’s economic activity as dollars once spent overseas on holidays have been instead turned to goods.

All states and territories have seen at last double digit growth in spending in the December quarter compared to the same time pre-pandemic.

The ACT leads the states and territories for retail spending, which has surged 19.4 per cent above decade averages in the December quarter.

Victoria only notched up a 10 per cent retail spending growth.

Investment on new industrial equipment was mostly flat in NSW, down just 0.9 per cent.

But in Victoria investment was slashed 5.2 per cent.