Queensland now has one of Australia's worst-performing economies, according to a report that attributes its fall largely to plummeting construction activity across the state.
The CommSec State of the States   January 2016 report, released on Wednesday, shows construction activity dropped by a massive 30 per cent last year and is 19 per cent below the decade average. 
Queensland dropped to sixth ranking in the latest quarterly report, down from fifth ranking in   October 2015.
It puts the Sunshine State ahead of only South Australia and Tasmania in economic performance.
CommSec chief economist Craig James said Queensland's best-performing indicators were retail spending and dwelling starts, however, it ranked last in the country for construction activity.
"Queensland remains entrenched in the third tier of economies, alongside South Australia and Tasmania," he said.
"While it's not included in the top three states for any of the performance indicators, encouragingly unemployment has fallen to two-year lows in trend terms and dwelling starts have lifted to seven-and-a-half year highs."
But Queensland Treasurer Curtis Pitt rejected the report's pessimism, saying its findings were "inconsistent" with the other economic analysis.
"While today's CommSec report is inconsistent with the majority of other analysis we're seeing, it does show that unemployment is now at a two-year low in Queensland and home construction is at a seven-and-a-half year high," Mr Pitt said.
"In fact we've created 60,400 new full-time jobs since the election with unemployment now at 5.9 per cent - down from 7 per cent under the LNP.
"Our economy really turned around in 2015 after three tough years of job-cutting and negativity from the LNP and I'm confident strong growth will continue this year.
"We know the Queensland economy is in transition from the massive $60 billion investment in LNG, which is why I'm focused on creating new jobs and partnering with the private sector to deliver new investment opportunities."
Queensland dropped to sixth place in the latest report after the rapid ascension of the Australian Capital Territory, which previously ranked below the Sunshine State but rose to equal third ranking with the Northern Territory.
The territory's rise was largely driven by record high dwelling starts, or house construction approvals.
New South Wales continues to lead the country in economic performance, followed closely by Victoria.
The two territories, the Northern Territory and the ACT, tied for third spot, while the Western Australian economy continued to slide, dropping to fifth spot.
Just more than a year ago, in the   October 2014 report, WA had Australia's strongest economy but has suffered a rapid slide on the back of the declining mining boom.
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