THE South Australian economy continues to languish in seventh spot, above only Tasmania, which has better momentum, according to CommSec's State of the States report.
The quarterly economic performance report by the Commonwealth Bank yesterday shows that SA lacks a growth driver, with dwelling starts down on the year. 
"South Australia does best on equipment investment (third-ranked), but is seventh ranked on three indicators," CommSec said.
The report shows that SA is in seventh position on economic growth, retail spending and dwelling starts and sixth best on population growth and home lending finance. But looking ahead, Tasmania and SA have drawn closer to both the Queensland and ACT economies in the economic performance ranking in the past quarter, it said.
"Tasmania has most potential to improve further, now ranked number one on unemployment and with dwelling starts up over 54 per cent on a year earlier," it said.
New South Wales and Victoria cemented their positions as the nation's two best-performing states on an economic basis, drawing on a growing population and robust home building activity.
The two powerhouse states boast the nation's brightest economic prospects for key metrics such as retail spending, housing finance and the number of new homes being built.
That bodes well for the health of the nation, with solid economic signs in these leading states ultimately resulting in a greater distribution of funds for public services.
But other states haven't fared as well, with those most exposed to the rapidly changing fortunes of the mining sector struggling to maintain momentum."We're now seeing that transition to housing-led growth, so it's the states that are stronger in population growth that are leading the way, as you'd expect," CommSec chief economist Craig James said.