The CommSec State of the States report for January - released on Monday - shows Tasmania had the best-performing economy for an eighth straight quarter, driven primarily by its "success in suppressing the COVID-19 virus" and avoiding lockdowns.

House prices increased 28.7 per cent in the 12 months to December, ahead of second-placed NSW at 26.2 per cent. Tasmania was far in front on dwelling starts at 61.3 per cent above the decade average, but among the lowest for housing finance figures.

The state was also in the lead on retail spending, equipment investment and relative unemployment, but has been surpassed in construction work by Victoria.

Tasmania's population increased 0.17 per cent, which was the state's slowest in 28 years of quarterly records.

The CommSec report foreshadowed "major changes" in the performance rankings as states and territories moves into "live with COVID" strategies this year.

While it painted a favourable picture of employment in Tasmania - at a "record low" of 3.9 per cent - economist Saul Eslake highlighted some emerging issues from December's Australian Bureau of Statistics data.

Hours worked in Tasmania fell by 0.7 per cent in December for a third straight decline, but remained 2.2 per cent above pre-pandemic levels.

The state's labour force also shrank by 4400 people for the month - three-quarters of whom were women - for the largest drop since May 2020.

Mr Eslake said this labour force reduction was the primary cause of the state's low unemployment rate.

"With the labour force shrinking four times as much as employment, Tasmania's unemployment rate dropped by 1.2 percentage points to 3.9 per cent, the lowest since July 2009," he said.

"Unfortunately this is not something to celebrate, because it's due entirely to the aforementioned drop in labour force participation.

"At 58.1 per cent in December, the proportion of working-age Tasmanians who had a job was by far the lowest of any state or territory, and 5.3 percentage points below the national average of 63.3 per cent."

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Tasmania's youth unemployment rate - covering those aged 15 to 24 - fell by 0.3 per cent, but was still the second highest in the country at 10.4 per cent, only behind the ACT.

Mr Eslake said this data pre-dates the effects of the Omicron outbreak, which has caused widespread disruption to business and retail conditions in Tasmania.