The quarterly State of the States report issued regularly by CommSec once again named on Monday Western Australia as the strongest state in the Land Down Under.

However, while the strong showing of WA is no longer surprising, an upset occurred with the Australian Capital Territory (ACT) grabbing the second spot from the Northern Territory.

The bases of CommSec in ranking the Australian states are eight key indicators such as economic growth, construction work, unemployment rate and investment. CommSec chief economist Craig James said a new source of growth for the states and territories is the housing sector.

"We are going to see a passing of the baton - the mining sector is peaking in terms of new investment, but the housing sector is lifting," ABC quoted Mr James.

"And after a long period of relative inactivity, a lack of building across the nation, we are seeing an improvement and that does have significant multiplier effects right through the broader economy," he added.

Retaining their middle rankings are the states of New South Wales, Victoria and Queensland, while in seventh and eighth places are South Australia and Tasmania.

Mr James added another major factor that would affect the states' performance and the broader economy is the big question mark over the date of the federal election, initially slated on Sept 14.

"The election is central to the current situation in the economy and the future outlook for the economy ... All economies should lift, once the uncertainty of the federal election is finally out of the way later in 2013," he added.

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