Western Australia is again the country’s best performing economy, CommSec’s quarterly State of the States report has found.

The report says the west is leading retail spending and performing strongly on six other indicators, including economic growth and population.

Its only weakness is new housing construction, in which it is ranked fourth compared to other states.

Queensland and the Northern Territory were also frontrunners when it came to growth.

“Overall the WA economy and the resource states are really driving the growth story,” economist Savanth Sebastian said.

“We’re starting to see the mining investment boom is shifting now to much more of a production boom.

“It’s starting to see income flow back to the resource states and the low interest rate environment also supporting the consumer and household angle as well.”

Tasmania was named the nation’s worst economic performer.

CommSec says it lags behind other state and territory economies on all but one performance indicator.

The report says stagnant population growth is reducing economic activity, with added weakness in commercial, engineering, construction and business investment.

Mr Sebastian says Tasmania is struggling.

“[It’s] really weak in terms of retail sales and economic growth. Unemployment is certainly a concern as well and the population-growth story is probably the biggest issue,” he said.

Tasmania’s one strength is housing finance – up 20 per cent on a year ago but still down 11 per cent on decade-average levels.

Mr Sebastian says New South Wales has shown weak economic growth in the past year, despite support from the housing market.

“Housing commencements, dwelling commencements [are] the big driver for some of these big state economies, even New South Wales,” he said.

“If you’re looking for areas of weakness for New South Wales it has to be the economic growth story.

“It’s certainly been a weaker growth story out of New South Wales in the last 12 months.”

Meanwhile, Mr Sebastian says the outlook remains good for WA.

“There are signs there of some modest cracks opening, in terms of pullback in activity from some very heady levels of activity,” he said.

“I think the WA economy, while it might pull back a little bit, it certainly will be the premier economy in terms of the growth story, over the next 12 months.”