Quarterly Gross State Product Australia, Quarterly GSP Australia, Quarterly State Accounts Australia. Economic growth. GSP growth. New South Wales (NSW), Victoria (Vic), Queensland (Qld), South Australia (SA), Western Australia (WA), Tasmania (Tas), Australian Capital Territory (ACT), Northern Territory (NT). Benchmarking. June quarter 2023, 2022/23. Australian Bureau of Statistics (ABS), Cat No. 5220.0, Cat No. 5206.0.
Practical Economics can update its quarterly Australian state and territory Gross State Product (GSP) data series now that the Australian Bureau of Statistics (ABS) has released new data.
On 5 September 2023 the ABS published the June quarter 2023 Australian National Accounts: National Income, Expenditure and Product (Cat. No. 5206.0). On 21 November 2023 the ABS released the annual 2022/23 Australian National Accounts: State Accounts (ABS Cat No. 5220.0).
This enables Practical Economics to true-up its 2022-23 quarterly GSP estimates to annual benchmarked data.
It also means that we can compare two sets of quarterly GSP estimates for 2022/23, one where the estimates as as far away from the annual benchmark as it gets, versus one where the estimates are completely benchmarked.
As it turns out the estimates give us an indication that the un-benchmarked estimates perform surprisingly well, except for specific situations, one of which happens to turn up in the current numbers. So we get an insightful lesson in addition to our normal goodness.
By way of background the ABS publishes quarterly Gross Domestic Product (GDP) in Cat. No. 5206.0, and annual GSP and GDP in Australian National Accounts: State Accounts (Cat No. 5220.0), but does not publish quarterly state and territory GSP.
The Practical Economics quarterly GSP method involves benchmarking quarterly industry indicators to annual GSP data. For a full description of the method see here and in the draft Technical Paper that can be downloaded here.
At this stage our quarterly industry indicators are national quarterly industry value-added data (i.e. the initial indicator for each industry is the same in every state and territory), which are benchmarked to annual state and territory GSP.
These are experimental data and we encourage you to read our disclaimers here and here.
Table 1 shows the updated quarterly and year-on-year growth to the June Quarter 2023. We’ll compare it to our old estimates later.
Table 1: June Quarter 2023 Practical Economics Gross State Product, Percentage Changes, Chain Volume Data, 2022/23 Annual Benchmark
| State | Quarterly Growth Sep-22 to Dec-22 | Year-on-year Growth June-22 to Jun-23 |
|---|---|---|
| NSW | 0.73 | 2.94 |
| VIC | 0.85 | 1.02 |
| QLD | -0.09 | 0.79 |
| SA | 0.49 | 2.31 |
| WA | 0.11 | 2.34 |
| TAS | 0.23 | 0.35 |
| NT | -0.96 | -6.77 |
| ACT | 1.44 | 4.48 |
| AUS | 0.46 | 1.81 |
The COVID lockdown induced contractions in all states and territories dominates a chart of historical quarterly GSP growth, with the double-dip lockdown apparent in the eastern states. Nevertheless, this chart shows Victoria’s recent improvement, although this has been reduced in the new benchmarked estimates. A large GSP contraction in the Northern Territory is the most notable new feature flowing from our revisions.
The national economy remains roughly back on track relative to the extrapolated pre-COVID lockdown trend, as estimated between the September quarter 2015 to the December quarter 2019, with the updated national estimate (sum of states) moving slightly closer to the previous trend. The loss in output between the March Quarter 2020 and the September Quarter 2021 appears permanent, with potential production and income lost forever.
The smaller States and Territories, with the exception of the Northern Territory, all remain above their pre-trend GSP. The Northern Territory’s 5.3% contraction in 2022/23 dragged it from above trend at the June Quarter 2022 to below trend for all four quarters of 2022/23. Victoria’s recovery from its COVID-lockdown driven economic slump was not as advanced as we previously estimated.
Table 2: Australia State and Territory Gross State Product, Potential versus Actual, Chain Volume, Seasonally Adjusted, Jun-23 vs Trend from Dec-2017, Positive Value Means Output Below Trend
| State/Territory | Output Gap (percentage points) |
|---|---|
| NSW | 0.51 |
| VIC | 3.72 |
| QLD | 0.39 |
| SA | -7.19 |
| WA | -5.61 |
| TAS | 0.49 |
| NT | 7.46 |
| ACT | 0.38 |
| AUS | -0.09 |
Now to the comparisons between the benchmarked and un-benchmarked estimates for the four quarters of 2022/23. As noted in our draft Technical Paper, every year the ABS releases up to four quarterly indicators before corresponding annual benchmark data are available. This requires that we, until the new benchmark becomes available, adjust each of the (up to) four indicators by the indicator to estimate ratios from each corresponding quarter the previous financial year.
Our previous estimates had the maximum number of four un-benchmarked estimates, so in theory represent the least accurate estimates we can produce at any time. In contrast, the new estimates contain no un-benchmarked values (84 sets of quarterly indicators to 21 sets of annual benchmarks), so in theory represent the most accurate estimates that we can produce.
Table 3 shows that, for most states and territories, the un-benchmarked estimates were closer to the benchmarked values than we though they would be. Victoria’s and Tasmania’s annual average growth (four quarters from 2022/23 summed relative to the same calculation the previous year) were lower, with Western Australia, South Australia and New South Wales a little higher.
Our big miss was the Northern Territory’s GSP growth, which was re-estimated from growth of 3.37% in the un-benchmarked estimates, to a contraction of 5.3% once the quarterly indicators from 2022/23 were benchmarked to annual GSP.
Table 3: Australia State and Territory Gross State Product, Annual Average Growth, 2022/23 over 2021/22, 2022/23 Indicators Benchmarked to 2022/23 Annual GSP vs Un-benchmarked
| State/Territory | Unbenchmarked | Benchmarked |
|---|---|---|
| NSW | 3.58 | 3.73 |
| VIC | 3.36 | 2.64 |
| QLD | 3.43 | 2.32 |
| SA | 2.93 | 3.82 |
| WA | 3.17 | 3.46 |
| TAS | 2.51 | 1.08 |
| NT | 3.37 | -5.25 |
| ACT | 4.14 | 4.30 |
| AUS | 3.38 | 3.02 |
Similarly, most states and territories’ year-on-year GSP growth were revised down slightly, except for the Northern Territory which we now estimate to have contracted by 6.77% between the June Quarter 2022 and the June Quarter 2023.
Table 4: Australia State and Territory Gross State Product, Year-on-year Growth, June Quarter 2023 over June Quarter 2022, 2022/23 Indicators Benchmarked to 2022/23 Annual GSP vs Un-benchmarked
| State/Territory | Unbenchmarked | Benchmarked |
|---|---|---|
| NSW | 2.45 | 2.94 |
| VIC | 2.28 | 1.02 |
| QLD | 2.23 | 0.79 |
| SA | 1.81 | 2.31 |
| WA | 2.16 | 2.34 |
| TAS | 1.47 | 0.35 |
| NT | 2.31 | -6.77 |
| ACT | 4.17 | 4.48 |
| AUS | 2.30 | 1.81 |
Except for the Northern Territory revisions, the Practical Economics team is happy with how close the un-benchmarked estimates were to the final benchmarked figures. However, the Northern Territory revision illustrates a key weakness in our method to calculate quarterly state and territory GSP.
As noted in our draft Technical Paper, Practical Economics uses national quarterly industry data benchmarked against state and territory annual GSP. This means that our estimated regional quarterly GSP growth is driven by annual GSP growth, the share of each industry in annual GSP and the national growth rate of that industry. If no annual benchmark data series is available for the last (up to) four quarters, then the un-benchmarked quarterly GSP estimates for these quarters will be close to the final benchmarked estimates only as long as each region’s growth in each industry is close to national growth for each corresponding industry.
Of course that’s not what happened for the Northern Territory here. According to the ABS:
The fall in GSP was entirely driven by Mining GVA which recorded a fall of 17.1%. Oil and gas extraction drove the decrease with weaker production volumes due to a combination of factors at key facilities. This was reflected in the 25.1% decline in the international exports of goods from the Northern Territory.
A screen shot of the ABS website shows how far the contraction in the Northern Territory’s mining industry, which contributed -5.0 percentage points out of its 5.3% GSP contraction, was from the national mining industry’s contribution to GDP growth of 0.1 percentage points.
Oh well, you win some, you lose some!
This problem could be avoided if we were able to develop individual industry indicator series for each state and territory, at least for the important industries in each region. However, this is lots of work and our day-job employer may get a little angry with our lack of productivity if we tried that.
The next regular update to our series will come from the ABS National Income, Expenditure and Product release on 6 December 2023, which will include national industry data for the September quarter 2023.
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