A few weeks ago the Australian Bureau of Statistics (ABS) published the September quarter 2021 Australian National Accounts: National Income, Expenditure and Product (Cat. No. 5206), which means we can update the Practical Economics quarterly Australian State and Territory Gross State Product (GSP) series.
The ABS does not publish quarterly state and territory GSP.
The Practical Economics quarterly GSP method involves benchmarking quarterly industry indicators to annual industry GSP, creating quarterly industry value-added, and then aggregating the results. For a full description of the method see here.
At this stage our quarterly industry indicators are simply national quarterly industry value-added, which are adjusted by annual state and territory GSP.
We always encourage you to read our disclaimers here and here.
National Gross Domestic Product (GDP) declined by 1.9% in the September quarter 2021, which flowed through to all States and Territories, with Practical Economics estimating that all economies contracted in the September quarter 2021.
Year-on-year growth to the September quarter 2021 also slowed in all economies, partly because of the poor results in the September quarter 2021, but also because the large rebound between the June quarter and September quarter 2020 is no longer in this calculation.
September Quarter 2021 Practical Economics Gross State Product, Percentage Changes, Chain Volume Data
| State | Quarterly Growth Jun-21 to Sep-21 | Year-on-year Growth Sep-20 to Sep-21 |
| NSW | -2.24 | 4.06 |
| VIC | -1.12 | 4.13 |
| QLD | -2.6 | 3.73 |
| SA | -3.31 | 4.32 |
| WA | -2.35 | 2.62 |
| TAS | -2.95 | 5.57 |
| NT | -0.11 | 2.86 |
| ACT | -1.66 | 2.84 |
| AUS | -2.09 | 3.78 |
Remember also that our quarterly indicator for each industry is the same for every state, being national GVA by industry, so relative differences in State and Territories’ economic performance prior to an annual benchmark (GSP) being available is due solely to differences in their respective industrial structures.
National seasonally-adjusted industry data are presented below. These are not an input to Practical Economics GSP series, as we seasonally-adjust total GSP within our procedure, but they show how various industries might be affecting State-level GSP. We do not seasonally-adjust our benchmarked State-level industry data in our GSP series, so the national seasonally-adjusted data are the best representation of how industries might affect GSP.
Quarterly National Industry GSP Growth June 2002 to September 2021, Chain Volume, 2019-20 Prices, Seasonally-Adjusted Data
| AgricultureForestryFishing | 1.4% |
| Mining | 1.7% |
| Manufacturing | -1.1% |
| ElecGasWater | -0.2% |
| Construction | -1.1% |
| WholeTrade | -5.4% |
| RetailTrade | -3.4% |
| AccomFood | -26.4% |
| Transport | -3.2% |
| InfoMediaTelecomms | 1.3% |
| FinInsur | 1.3% |
| RentHiringReaEst | -1.2% |
| ProfScienceTech | -0.9% |
| AdminSupport | -2.1% |
| PublicAdmin | 0.8% |
| EducationTrain | 0.4% |
| HealthSocial | -2.1% |
| ArtsRec | -7.5% |
| OtherServ | -11.8% |
| OwnDwel | 0.5% |
The Northern Territory suffered a relatively minor contraction due to growth in the Mining and Public Administration industries. These two industries are the Northern Territory’s largest contributors to GSP.
However, despite its reliance on mining (49% of GSP in 2020-21) and growth in the mining industry, Western Australia’s poor performance across a range of industries, especially Accommodation and Food.
Original (non-seasonally-adjusted) Western Australian industry GSP in Practical Economics’ series in Accommodation and Food was 14% lower than the September quarter 2020 and was at its lowest September-quarter level since 2008-09. At first glance this indicates that Western Australia’s local tourism boom, due to COVID-based restrictions on locals from travelling interstate and overseas, might be waning.
Or is it?
The Western Australian result could simply be an extrapolation of the poor national quarterly indicator result, which will be adjusted upwards when the 2021-22 annual Western Australian GSP benchmark becomes available. By way of comparison, Western Australia chain volume expenditure in the Accommodation, Cafes and Restaurants industry, as evidence in State Final Demand Data (Table 30), increased by 15% from September 2020 to September 2021.
Always something to work on! Perhaps we’ll have to look for state and territory-specific industry indicators sooner than we’d hoped.
It also reminded us that we should write the code to seasonally-adjust state and territory level industry GSP data. However, we do note that the COVID lockdown-driven contractions make seasonally-adjusting data very awkward.
Turning to our usual chart of all States and Territories economic (GSP) growth, it’s tough to pick any major revisions so we won’t try. The most prominent part of each chart remains the COVID-lockdown driven contraction in the middle of 2020.
A more worrying feature is the decline in economic activity in the September quarter 2021.
Quarterly State and Territory GSP Growth September 2002 to September 2021 Chain Volume, 2019-20 Prices, Seasonally Adjusted
Turing to the output gap for various regions, we’ve updated our methodology, from calculating potential output based on the 25th last observation to the 6th last observation, to the 20 observations immediately prior to the COVID-induced downturn.
Quarterly State and Territory GSP Output Gap, Chain Volume, 2019-20 Prices
Under old method, the national output gap increased from 1.4 percentage points after the June quarter 2021 to 2.0 percentage points in the September quarter 2021.
However, under the new method the national output gap is now 4.2 percentage points. This is because previous inclusion of quarters affected by the COVID lockdowns dragged potential output lower.
September Quarter 2021 Output Gap, Percentage Gap, Chain Volume Data (positive gap means output below trend)
| Output Gap, Old Method (ppts) | Output Gap, New Method (ppts) | |
| NSW | 1.96 | 4.66 |
| VIC | 4.38 | 7.02 |
| QLD | 2.08 | 4.73 |
| SA | -0.35 | 1.54 |
| WA | -0.56 | -0.12 |
| TAS | 1.06 | 2.52 |
| NT | 0.71 | 0.39 |
| ACT | 2.07 | 2.98 |
| AUS | 2.02 | 4.22 |
Similar revisions were recorded for all States and Territories.
The next update to our series will flow from the ABS National Income, Expenditure and Product release on 2 March 2022, which will include national industry and demand data for the December quarter 2021, and hence equivalent indicators for our series.
We’ll get to it as soon as possible after 2 March. Our code is becoming more robust (i.e. less likely to crash and not produce results, we make no claim whether the data are ‘correct’ or not) each time we use it, but it and the write-up is still too time-intensive for our liking.
If you have any comments, suggestions or want to purchase full results then please contact us. This isn’t our full-time job and we generate Practical Economics content when we can, so we might not reply immediately, but we will get back to you.