Pete Wargent blogspot

Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), and 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 is 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 and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and '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 of the world's most popular & widely-read financial publications.

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

Friday, 17 July 2015

City versus regional jobs divide widens

Regions fade

The ABS released its Detailed Labour Force figures for the month of June 2015 which confirmed an ongoing trend towards capital city employment and regional unemployment.

Part 1 - Sydney economy strong

Total employment in Sydney has increased robustly over time to around 2.5 million, while regional employment has been stuck around 1.2 million for half a decade now. It's largely a similar story between Melbourne (2.3 million employed) and regional Victoria (671,000).

The cumulative employment growth chart shows that while there was some decent regional employment growth through the latter stages of the mining investment boom, this has now stalled over the past half decade.

Consequently there is a gradual but definitive divergence taking place between city and regional labour markets. In June the Greater Sydney unemployment rate declined to just 4.7 per cent, but regional unemployment is still trending upwards. The impact of the mining boom is stark

The impact of the "once in a century" mining boom is stark when viewed in these terms. Alas those glory days are now in the past.

Part 2 - Adelaide's struggles

That's not to say that all capital city labour markets are faring well - Adelaide isn't.

Total employment in Adelaide has now declined by 6,900 over the past four years as its manufacturing base is eroded. 

Part 3 - City versus regional divide

The monthly data for unemployed persons and unemployment rates is not particularly reliable, but smoothed on a rolling annual basis there has been a clear trend towards rising regional unemployment, particularly in Queensland and New South Wales.

With an unemployment rate of 7.6 per cent, Adelaide has the unenviable position of holding by far and away the highest capital city unemployment rate in Australia.

Again, the monthly data is not particularly reliable, so below the capital city employment rates have been smoothed on a rolling annual basis. 

The data shows that low interest rates are working to some extent in Sydney where the unemployment rate has declined all the way to 4.7 per cent in June 2015. An unemployment rate downtrend is also in place in Brisbane (5.2 per cent) and Melbourne (5.8 per cent). 

On the flip side, Adelaide is trending up concerningly, and Perth continues to trend up from a position of near full employment in Q2 2008. 

Although no longer included in my chart above, it's a fair assumption that Darwin may shape upwards in a similar vein to Perth over time.

The wrap

Overall, employment growth is all about the capital cities these days, with close to three quarters of the net increase in employment accounted for by just four capital cities - Greater Sydney, Melbourne, Brisbane and Perth - since June 2010.

Not so much doing elsewhere as the resources investment boom turns to capex bust and manufacturing continues to fade as a share of total Australian employment.