Western Australia has once again topped CommSec’s State of the States report, leading the nation’s economic performance rankings for the fourth consecutive quarter.
The July 2025 edition of the State of the States report draws on data from the March 2025 quarter, with population figures from December 2024 and unemployment from June 2025. Indicators include housing finance, construction, population growth, and economic growth.
Western Australia continues to outperform across key housing and investment metrics, with retail trade, housing finance and business investment all ranking first.
“Western Australia led across several economic measures, taking first place in retail trade, housing finance, and business investment,” said chief CommSec economist Ryan Felsman (pictured).
“Overall, the economic performance of Australia’s states and territories is being supported by a combination of slowing inflation, falling interest rates, rising real wages, robust government spending and a solid labour market.”
However, Australia’s broader economic outlook remains weighed down by deeper structural challenges. Roy Morgan has cautioned that widespread institutional distrust, persistently low consumer confidence, and rising household financial stress are acting as a “hidden brake” on national recovery.
Westpac’s Leading Index also flagged weakening forward momentum, with the six-month annualised growth rate slipping to just 0.03% in June, down from 0.11% in May – signalling below-trend growth for the second half of 2025
South Australia climbed from fourth to second, supported by strong gains in dwelling starts and construction work.
“South Australia ranks first on two indicators – construction work and dwelling starts,” Felsman said.
The state has seen a lift in consumer spending and business investment since the start of 2025, driving a broader improvement in economic performance.
Queensland held third place, bolstered by low relative unemployment and strength in housing finance. However, the state’s southeast was affected by ex-Tropical Cyclone Alfred, which disrupted consumer activity during the March quarter.
Victoria slipped to fourth, down from second. While the state remained in third position across four key indicators, it was held back by relative unemployment levels.
Victoria remained in second place for retail spending, with levels sitting around 10% above the decade average.
New South Wales fell to sixth, as a delayed shift from public to private sector growth continues. The ACT also ranked sixth, constrained by soft public demand and weak business investment.
Tasmania remained in fifth, supported by record-low unemployment, but hampered by weak population growth.
The Northern Territory stayed in last place, with its decade-average comparisons still distorted by earlier LNG construction booms. However, CommSec noted improvement in NT’s economic performance over the past year.
Looking ahead, Felsman said the outlook will hinge on the job market, interest rates, and global policy.
“But economic growth has moderated, held back by slowing public investment, population growth and household spending. The future path will depend on the resiliency of the job market, further interest rate cuts and US President Donald Trump’s trade policies,” he said.
CommSec also ranked states and territories by annual growth across the eight indicators, revealing WA remains strongest on momentum, followed by South Australia. The Northern Territory climbed into third spot, while Queensland slipped to fourth after weather-driven export disruptions.
New South Wales and Victoria both sat in fifth, buoyed by rate cuts and migration. The ACT and Tasmania trailed on private sector investment performance.
Get the hottest and freshest mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
