Pete Wargent blogspot

Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), & CEO of WargentAdvisory (providing subscription analysis, reports & services to institutional clients).

5 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he's one of the finest property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.

"I've been investing for over 40 years & read nearly every investment book ever written, yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data & charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, author of the New York Times bestsellers 'End Game' & 'Code Red'.

"The level of detail in Pete's work is superlative across all of Australia's housing markets" - Grant Williams, co-founder RealVision - where world class experts share their thoughts on economics & finance - author of Things That Make You Go Hmmm, one of the world's most popular & widely-read financial publications.

"Wargent is a bald-faced realty foghorn" - David Llewellyn-Smith, 'MacroBusiness'.

Sunday, 5 April 2015

Jobs growth since 2007 (mining employment crash)

Capital cities and regional areas diverge

The Reserve Bank's chart packs show that Australia approached peak household debt around 2007.

No longer could dwelling prices in regional Australia be driven by rising debt levels to the extent that they had been in the past.

The latest Detailed Labour Force data to February 2015 showed how the two most populous capital cities have created many more jobs since 2007 than their regional counterparts. 

Since 2007, cumulative total employment growth in Sydney (+310,000) and Melbourne (+351,000) has been solid enough, though the labour market could clearly be doing better than it is.

Meanwhile through the heady fervour of the mining boom employment growth in regional New South Wales (+95,000) and Victoria (+63,000) had actually been fairly solid until around 2010, but now it is lagging. 

Full-time jobs

The real driver of migration and dwelling prices, however, is full-time employment, and here the gap in cumulative jobs growth is becoming a gulf.

Sydney (+183,000) and Melbourne (+163,000) have created healthy-ish net growth in their respective full-time positions over the 8 years from February 2007 to February 2015.

On the other hand, regional New South Wales (+20,000) and regional Victoria (+13,000) have not.

Mining regions to suffer

Moreover with the mining investment and construction boom having definitively now passed its peak over the past year, the challenges for many regional areas are set to heighten.

It was less than 3 years ago that cashflow investors and analysts were raving about Port Hedland, South Hedland, Roxby Downs, Moranbah, Karratha, Emerald, Gladstone, Blackwater, Zeehan, Chinchilla, promising "at least a decade of growth".

If something sounds too good to be true, it likely is.

Over the past 12 months nearly 50,000 jobs have already been cut from the resources sector (manufacturing hasn't been faring much better, shedding 23,500 positions).

We have seen an unprecedented boom in mining construction and therefore related resources sector employment over the past dozen years or so - but now we should get set for a corresponding resources investment and employment bust, on a scale not previously seen in Australia.

Regional unemployment rising

This is already beginning to show itself in the unemployment data, with the latest figures showing regional New South Wales unemployment rates rising to above 8 per cent, which is gradually set to be reflected in my rolling 12 monthly unemployment rate chart below.

Dwelling prices in Sydney are obviously booming, and the ripple effect has benefited many regional cities and centres since 2009, albeit to a lesser degree. However, rising regional unemployment is now adding significant headwinds to future growth.