Robust population growth, healthy consumer spending and a surge of housing construction have helped make NSW the nation's best-performing state economy for a third consecutive quarter, a report by Australia's biggest bank said.

The State of the States report collated by Commonwealth Bank's stockbroking arm, CommSec, showed NSW rose to the top in October last year at the expense of minerals-rich Western Australia.  WA, which outshone other states during much of the mining boom, has now slipped to third behind NSW and Northern Territory. Victoria is the fourth-ranked economy but is closing fast on Western Australia. Tasmania was at the bottom of the economic performance table.

The CommSec report assesses each state according to economic growth, retail spending, equipment investment, unemployment, construction work, population growth, housing finance and dwelling commencements. The latest level of each indicator is compared with the state's decade average.

It said NSW gained the top ranking for population growth, retail trade and housing starts. NSW was placed second on business investment, and housing finance. It was fourth for overall construction work and unemployment and fifth on economic growth.

A key factor in NSW's recent economic resurgence has been the strength of the housing sector. The state's growing population growth has helped push up property prices and stoked demand for new housing. "Over the past quarter, NSW has improved its position on housing finance and dwelling starts to consolidate its position at the top of the economic performance rankings," the CommSec report said. The report also drew attention to relatively strong consumer spending in NSW – retail trade during the December quarter was 17.1 per cent above the state's decade average.

CommSec's report said the outlook for the state economy was healthy. "NSW looks to be well supported by home construction and infrastructure spending over 2015," it said. Record low interest rates and a weaker Australian dollar have both been crucial to NSW's recent economic improvement.

The relative strength of the NSW economy was underscored by employment figures released last week that showed the jobless rate in NSW fell 0.2 of a percentage point to 6 per cent last month. Total employment grew by 26,000 in NSW in March which made up almost 70 per cent of all jobs created nationally during the month. The Bureau of Statistics said 11,200 of the jobs added in NSW were full-time. The state's unemployment rate has now been at or below the national average for 16 consecutive months. The number of unemployed people in NSW fell by 8600 last month to 231,800.