NSW economy takes COVID population hit

NSW is struggling to digest its lowest level of population growth in more than 25 years, a new reading on the state’s economy reveals.

The huge drop in internation migration has put the brakes on the NSW economy. Picture: AAP

NSW is near the back of the pack for economic performance this year as sluggish building activity, employent and population growth weigh on the state’s bottom line.

The latest “State of the States” quarterly report from CommSec details a shift in the forces driving the Australian economy since COVID which has weighed on the bigger states.

In terms of overall economic growth compared to its long-term average, NSW ranked seventh in the latest CommSec report, its lowest ranking in nearly a decade.

The state recorded annual nominal economic growth of -4.3 per cent for Victoria, a figure shared with Victoria during the latest quarter. Employent growth in NSW was also equal lowest among the states, at 0.1 per cent, a reading again shared with its southern neighbour.

The huge drop in international migration is caused by COVID is a major factor, with CommSec reporting NSW had experienced its slowest rate of population growth in 25 years. This appears to be having a flow on effect in building, with new housing starts down 4.9 per cent in NSW.

But as thousands leave Sydney for the regions, plenty of houses are changing hands, with the value of housing finance up 43.6 per cent in the state, a rate of growth lower than everywhere expect the ACT, and well behind the 100 per cent-plus growth of WA and the Northern Territory.

At the other end of the scale, Tasmania leads the national economic ladder thanks to its strong population growth from a low base as many Australian’s flock to the Apple Isle, CommSec reported.

Picture: Supplied

Construction work in Victoria has 3 per cent on a year ago, but still leads the country as the number one building state.

NSW sits at third, where construction rates are 5.8 per cent higher than the decade average.

This follows a significant hit over 2020 that saw construction across the state decline 5.7 per cent.

Despite recent falls construction in Victoria is still 17.5 per cent above its decade average.

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

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.

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.

That’s compared with NSW where spending was up 15.3 per cent on normal levels.

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.