Mr James said part of the strong result for Victoria was its government's finances.

"The Victorian government has got its finances in order and I think that helps give companies confidence to set up there for growth."

Victoria eked out a $1 billion budget surplus this year. Despite a $5.2 billion hit from the property slowdown, it retained top spot for construction work done, 25.6 per cent above its decade average.

NSW construction was next strongest, 23.9 per cent above its decade average, and Tasmania was third.

Victoria also has the strongest job market. CommSec notes that unemployment in Victoria stands at 4.8 per cent, a rate 14.4 per cent below the state's decade average. While employment growth is 14 per cent above the decade average.

However there have been some questions about the potential for wage growth there following the state government's decision to impose a 2 per cent cap on public sector pay rises.

Next best was NSW, its 4.5 per cent jobless rate was 13.4 per cent below the decade average. Queensland remains in fifth spot from South Australia and both must contend with relatively high jobless rates.


Overall economic activity in Victoria as measured by state final demand plus trade in the June quarter was 26.6 per cent above its decade-average level of output. NSW was again second with output 24.7 per cent above its decade average level.

Another surprise was the level of retail spending. Victoria topped the charts again with inflation-adjusted retail trade in the June quarter 15.8 per cent above the decade-average.

"Strong population growth, low unemployment, increased job security and infrastructure building are key supports for retail spending," Mr James said.

However on population performance – the current annual growth rate compared with each economy’s decade-average growth pace – Victoria came in fourth.

Only three economies have population growth above long-term averages.

"Population growth is clearly an important driver of the broader economy, especially retail spending and housing demand," Mr James said.

Tasmania is strongest on the relative population measure, with its 1.21 per cent annual population growth rate 109.3 per cent above its decade-average

rate. Queensland is the next strongest on population growth, up 4.1 per cent on the decade average, followed by NSW up 2.8 per cent.

And when it comes to businesses spending on plant and equipment four states and territories showed above decade-average levels.

Tasmania was number one, up 28.3 per cent on the state's decade average, ahead of the ACT (up 18 per cent) and Victoria (up 10.8 per cent). NSW remains in fourth position (up 9.3 per cent).