The ACT has emerged as the second-worst overall performing economy in the country for the second quarter in a row this year, coming only ahead of the Northern Territory, in the latest CommSec State of the States report.
Despite the low ranking on the national leaderboard, report author and CommSec chief economist Craig James said the territory's economy was in "pretty good shape", with the ACT leading the nation on retail spending.
Cost-of-living pressures, higher interest rates and a weak consumer sentiment have generally led to a slow down in retail consumption but the ACT has upped its spending by 15.3 per cent in the March quarter on decade average levels.
The report rates states and territories on eight key indicators, including economic growth, retail spending and unemployment, every quarter and compares the result with the decade average.
In the March quarter, Tasmania retained its spot as the nation's economic leader, ranking first on equipment spending and housing construction starts.
But the report points out there isn't much separating the top four economies, which include NSW in second place, South Australia in third and Queensland in fourth.
Despite having one of the lowest unemployment rates in the country at 3.1 per cent, the ACT was ranked last on job market performance, its jobless rate 19.6 per cent below the 4.3 per cent decade average.
At the same time, the territory had some of the fastest job growth in the country, ranking only behind South Australia.
Mr James told The Canberra Times while the ACT always had low unemployment, other states and territories were catching up.
"As a result, they're not outperforming to the same extent that they may have been in the past," he said.
Generally, Mr James said ACT's economy was in "pretty good shape".
"It's got a pretty low rate of unemployment and retail spending is good," he said.
"It's hard to be overly downbeat on that. But what we're comparing is the performance of the ACT with other states and territories."
The ACT, however, saw a decline in housing construction starts in the March quarter.
And while a number of other states and territories have seen their populations grow as a result of foreign borders reopening, the ACT's population growth levels dropped 6 per cent in the March quarter when compared to the decade average.
Mr James said the territory was currently not getting its share of migration and as a result "not getting that momentum going through to the economy".
Looking ahead nationally, the report authors state population, job market and housing trends should be closely monitored.
"As noted in the last survey, the potential for stimulus in the Chinese economy will be important for resources and tourism-focused states," the report stated.
"But clearly, the success achieved in lowering the rate of inflation will determine the path of interest rates and economic activity across all states and territories."
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