On 19 November 2021 the Australian Bureau of Statistics (ABS) published its 2020-21 State Accounts, containing annual Gross State Product (GSP) for each state and territory in the federation.
Previously, on 30 September 2021 Practical Economics published full-year 2020-21 data for our quarterly Gross State Product (GSP) for Australian States and Territories, despite not yet having a 2020-21 annual GSP benchmark.
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.
We always encourage you to read our disclaimers here and here.
The 30 September Practical Economics quarterly GSP estimates were based on extrapolating 2020-21 quarterly industry indicators obtained in ABS National Income, Expenditure and Product, using the adjustment factors derived from 2019-20 benchmark year in Practical Economics’ quarterly GSP for that year.
For example, the June quarter 2020, for which we had the 2019-20 GSP benchmark.
GSPs,i,t=Is,i,t*As,i,t
Where:
- GSPs,i,t is GSP for State s, industry i and time quarter t
- Is,i,t is the indicator for State s, industry i and time quarter t
- As,i,t is the adjustment factor (from equation 10 in Cholette) for State s, industry i and time quarter t
However, for an un-benchmarked indicator, as was previously the case for 2020-21, we make use of the most recent adjustment factor for the quarter in question. That is, where As,i,t is not available:
GSPs,i,t=Is,i,t*As,i,(t-4)
For example, before the 2020-21 annual benchmark became available, the September quarter 2020 (i.e. September of 2020-21) indicator was multiplied by the adjustment factor for the September quarter 2019.
However, the 2020-21 annual GSP benchmarks are now available and we’ve updated our adjustment factors accordingly.
So how did the annual sum of our un-benchmarked QGSPs go against the new annual numbers? Let’s take a look.
Practical Economics Quarterly State and Territory GSP: Un-Benchmarked Prior to 2020-21 State Accounts versus Benchmarked Against 2020-21 State Accounts[1]There will be slight differences between Benchmarked GSPs and those contained in ABS 5220.0 – seasonally adjusted..
| Un-benchmarked | Benchmarked | |
| NSW | 1.50 | 1.45 |
| VIC | 1.79 | -0.38 |
| QLD | 1.24 | 2.01 |
| SA | 2.71 | 3.86 |
| WA | 0.02 | 2.62 |
| TAS | 4.01 | 3.79 |
| NT | 0.87 | -0.60 |
| ACT | 2.09 | 2.81 |
| AUS | 1.41 | 1.48 |
As you would expect, the national figure in each Practical Economics un-benchmarked Gross Domestic Product (GDP) calculation is similar to its equivalent benchmarked figure. The national number was slightly revised by the ABS between its 2020-21 expenditure-based GDP estimate and its full 2020-21 estimate.
However, while Practical Economics annual GSP for some State and territories was similar in both the benchmarked and un-benchmarked series, others diverged dramatically.
Why the differences?
Remember also that our indicator for each industry is the same for every state, being national GVA by industry.
One of our (seemingly forever) long-term projects is to construct decent indicators for each industry in each state. However, the proprietor’s day job and other obligations means that we probably won’t get to it until someone is willing to pay for it.
Regardless, the major source of deviation between the un-benchmarked data and the benchmarked data is how each industry in each state or territory deviated from the equivalent national industry performance.
Turning firstly to Victoria, where GSP growth was revised down from 1.79% in 2020-21 to a contraction of 0.38%. Victoria has a diversified economy and its reduction in benchmarked GSP growth for 2020-21 compared to the previous un-benchmarked growth was due to a range of industries performing worse than nationally.
Victoria GSP Growth 2020-21, Chain Volume, Un-benchmarked vs Benchmarked
| Unbenchmarked | Benchmarked | Difference | |
| AFF | 28% | 24% | -4% |
| Mining | -3% | -10% | -7% |
| Manufacturing | 1% | -3% | -5% |
| ElecGasWater | -1% | -2% | 0% |
| Construction | -2% | -5% | -3% |
| WholeTrade | 7% | 4% | -2% |
| RetailTrade | 6% | 0% | -6% |
| AccomFood | 1% | -7% | -8% |
| Transport | -8% | -8% | 0% |
| InfoMediaTelecomms | 3% | 4% | 2% |
| FinInsur | 3% | 2% | -1% |
| RentHiringReaEst | 2% | 0% | -2% |
| ProfScienceTech | 2% | 0% | -2% |
| AdminSupport | -9% | -9% | 0% |
| PublicAdmin | 4% | 5% | 1% |
| EducationTrain | 1% | 1% | 0% |
| HealthSocial | 6% | 4% | -2% |
| ArtsRec | -2% | -6% | -5% |
| OtherServ | 0% | -9% | -9% |
| OwnDwel | 2% | 1% | 0% |
| Total | 2% | 0% | -2% |
This is hardly surprising given a number of lockdowns during 2020-21, which decimated the State’s service sector.
In contrast, Western Australia’s GSP growth was revised up from 0.02% to 2.62%. Its mining industry accounted for approximately 47% of its GSP in 2019-20, so this industry’s over-performance relative to the national equivalent was a major reason for Western Australia’s improved performance
Western Australia GSP Growth 2020-21, Chain Volume, Un-benchmarked vs Benchmarked
| Unbenchmarked | Benchmarked | Difference | |
| AFF | 27% | 29% | 1% |
| Mining | -3% | 0% | 3% |
| Manufacturing | 1% | 8% | 7% |
| ElecGasWater | -1% | -1% | 1% |
| Construction | -2% | 0% | 1% |
| WholeTrade | 7% | 10% | 3% |
| RetailTrade | 6% | 9% | 3% |
| AccomFood | 1% | 4% | 2% |
| Transport | -8% | -6% | 2% |
| InfoMediaTelecomms | 3% | 2% | 0% |
| FinInsur | 3% | 4% | 1% |
| RentHiringReaEst | 2% | 3% | 0% |
| ProfScienceTech | 2% | 2% | 0% |
| AdminSupport | -9% | -9% | 0% |
| PublicAdmin | 4% | 4% | 0% |
| EducationTrain | 1% | 1% | 0% |
| HealthSocial | 6% | 7% | 1% |
| ArtsRec | -2% | -1% | 0% |
| OtherServ | 0% | 8% | 8% |
| OwnDwel | 2% | 2% | 0% |
| Total | 0% | 2% | 2% |
Like Western Australia, the Northern Territory is highly reliant on mining (about one quarter of its economy), so its under-performance relative to the national indicator explains its drop in growth between the un-benchmarked GSP series and the benchmarked series.
Northern Territory GSP Growth 2020-21, Chain Volume, Un-benchmarked vs Benchmarked
| Unbenchmarked | Benchmarked | Difference | |
| AFF | 28% | 29% | 2% |
| Mining | -3% | -13% | -10% |
| Manufacturing | 1% | 0% | -1% |
| ElecGasWater | -1% | 1% | 2% |
| Construction | -2% | 0% | 2% |
| WholeTrade | 6% | 12% | 5% |
| RetailTrade | 6% | 8% | 3% |
| AccomFood | 1% | 8% | 7% |
| Transport | -8% | -6% | 2% |
| InfoMediaTelecomms | 3% | 4% | 1% |
| FinInsur | 3% | 5% | 2% |
| RentHiringReaEst | 2% | 0% | -2% |
| ProfScienceTech | 2% | 6% | 4% |
| AdminSupport | -9% | -7% | 1% |
| PublicAdmin | 4% | 4% | 0% |
| EducationTrain | 1% | 1% | 0% |
| HealthSocial | 6% | 5% | -1% |
| ArtsRec | -2% | 5% | 6% |
| OtherServ | 0% | 10% | 10% |
| OwnDwel | 2% | 2% | 0% |
| Total | 1% | -1% | -2% |
Australia’s output gap closed slightly due to the revision of 2020-21 data, from 1.73 percentage points to 1.4 percentage points.
Why did output gap for Australia fall despite a relatively small revision of GDP growth? It simply seems to be the normal progression of the base year for chaining (and hence price indices) from 2018-19 to 2019-20.
Swings to state and territory output gaps largely reflected revisions to GSP growth for 2020-21.
June Quarter 2021 Output Gap, Percentage Gap, Chain Volume Data (positive gap means output below trend)
| Un-benchmarked | Benchmarked | |
| Out_Gap_NSW | 1.75 | 1.49 |
| Out_Gap_VIC | 2.55 | 4.94 |
| Out_Gap_QLD | 2.65 | 1.22 |
| Out_Gap_SA | -0.3 | -2.14 |
| Out_Gap_WA | 0.56 | -2.52 |
| Out_Gap_TAS | -0.88 | -0.56 |
| Out_Gap_NT | -2.4 | 0.83 |
| Out_Gap_ACT | 1.76 | 0.63 |
| Out_Gap_AUS | 1.73 | 1.4 |
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.
Quarterly State and Territory GSP Growth September 2002 to June 2021 Chain Volume, 2019-20 Prices
The next update to our series will flow from the ABS National Income, Expenditure and Product release on 1 December 2021, which will include national industry and demand data for the September quarter 2021, and hence equivalent indicators for our series.
We’ll get to it as soon as possible after 1 December. 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.
References
| ↑1 | There will be slight differences between Benchmarked GSPs and those contained in ABS 5220.0 – seasonally adjusted. |
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