An analysis by CommSec of Australia's states and territories' performance for the fourth quarter of 2011 showed that Western Australia is the strongest state in terms of economic performance.

WA topped the list based on its construction activities, business equipment spending and its 4.3 per cent unemployment rate. The state is also performing well in terms of retail spending and population growth.

Craig James, chief economist of CommSec, said WA is expected to retain its number one position in the coming quarters.

The analysis also showed that from a two-speed economy, Australia has become a three-speed economy.

Next to WA, the states that belong to the second speed are Victoria and the Australian Capital Territory. Victoria is considered the second best performer because of its strong housing activities as it reported a 21 per cent hike in housing starts compared with the state's 10-year average.

However, compared to the previous year, Victoria's housing starts is 8 per cent lower and trends indicate the downward movement may likely continue, Mr James said.

The five other states and territories made up of Tasmania, Queensland, South Australia, New South Wales (NSW) and the Northern Territory belong to the third speed, the slowest, although Queensland is moving upward based on its resources and rebuilding sectors. What is hampering Queensland is its soft housing market, Mr James explained.

Queensland registered a 19 per cent increase in its Q4 output above long-term average.

In a separate report, Deloitte Access Economics took note of Queensland's fast economic growth since the natural calamities that battered the state in 2011.

"The return to full capacity of the state's coal production is combining with a truly remarkable surge in business investment spending to underpin the great gains in output growth as well," the Herald Sun quoted the Deloitte report.

"Not only is coal production rebounding in the wake of floods, but the stunning amount now being spent on new mining production potential is set to bear fruit over the next few years," the firm added.

Given Queensland's strong growth, Deloitte forecast that the state would be the best performer in 2012 and 2013.

However, within the state are 10 different speeds, with the tourism and housing sectors considered the laggards.

On the bottom of the list is NSW which has an uncertain economic outlook because of its steady unemployment rate and slightly above long-term average population growth.

Mr James added that NSW's growth in equipment investment has slowed and retail spending is on a decline as well as dwelling starts compared to 12 months ago.

He added that the two 25-basis points interest rate cuts made by the Reserve Bank of Australia in November and December 2011 could help boost housing activities across the country. He said NSW and Queensland would likely benefit the most from that development.

"If the global economy picks up steam, this will benefit resources-dependent economies such as Western Australia, Queensland, South Australia and Northern Territory," The Sydney Morning Herald quoted Mr James.

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