The economic weakness linked to the end of the mining construction boom continues to weigh on Australia's resource-rich states, but both New South Wales and Victoria remain strong, according to CommSec's latest quarterly State of the States report.

Key points: NSW best performing economy in Australia, report finds

NSW best performing economy in Australia, report finds WA continues to decline, dropping to sixth

WA continues to decline, dropping to sixth Signs positive for SA, Queensland

The report analysed eight key indicators including economic growth, retail spending, equipment investment, unemployment, construction work done, population growth, housing finance and dwelling commencements.

NSW remained the country's best performing economy during the latest quarter, but Victoria edged closer to the top spot.

Both states maintained a strong lead over the other states and territories.

CommSec State of the States rankings: 1. New South Wales 2. Victoria 3. Australian Capital Territory 4. Northern Territory 5. Queensland 6. Western Australia 7. Tasmania, South Australia (equal)

NSW boasted the best scores on population growth, retail trade, dwelling starts and unemployment, but drifted to second place on the housing finance indicator.

CommSec economist Savanth Sebastian said Victoria had very strong housing finance, retail spending, population growth and unemployment figures and was becoming a real threat to its northern neighbour.

"It's very likely that Victoria will edge even closer to New South Wales," he said.

"Maybe in six to nine months' time, if the trend and the momentum continues, Victoria may surpass the New South Wales economy."

The ACT was ranked the third-best economy, while the Northern Territory held onto fourth place.

The report revealed there was now not a great deal of room between the Top End and the fifth-placed Queensland economy.

WA drops as mining construction boom ends

Western Australia dropped from equal fifth with Queensland into sixth place.

Tasmania moved up the rankings from the worst performing economy, to be equal seventh with South Australia.

Mr Sebastian said the WA economy had undergone a huge turnaround, and there was now very little to separate the bottom three economies

"Over the past couple of quarters, the Western Australian economy has continued to shift down in terms of the rankings," he said.

"I think those concerns around the mining boom — the construction phase coming to an end — it's creating a bit more concern around unemployment and in particular, with population growth slowing as well."

The Northern Territory scored very highly on economic growth and construction work, but momentum in its economy is petering out.

The Top End is now ranked last on population growth, business investment and housing finance.

Signs positive for Queensland, South Australia

Mr Sebastian said Queensland had been languishing around the middle of the economic ladder for some time, but the low Australian dollar was likely to provide a boost.

"Tourism is going to be a big driver for the state, exports of agriculture will be supportive and also the education sector from international students," he said.

"So we should see over the next couple of years that the Queensland economy continues to strengthen. But it is a very big economy in terms of the size of the state, and it takes a while for that ripple effect to feed through."

Mr Sebastian said there were also some encouraging signs for the beleaguered South Australian economy.

"The defence deal for submarines — that may actually provide a bit of a boost for the South Australian economy," he said.

"It used to be a big education hub the last time the dollar was down at these sort of levels, and now that the dollar is back in the 70s rather than at parity with the US dollar, I think over the next year or two, you will see that international education will be a driver of the growth story for South Australia."

He added that Tasmania was beginning to pick up some much-needed momentum and there were some healthy indications in that state's labour market.

"There is a modest lift in momentum taking place and I think, a healthy pick up in terms of retail, and keep in mind, it's fourth ranked when it comes to unemployment as well."

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