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CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Friday, 16 October 2015

NSW is adding jobs #likeaboss (SA shocker)

Jobs report

The ABS Labour Force result is out for September 2015 is out, and in the context of what has gone before it was a decent result, ongoing concerns dogging the credibility and accuracy of the survey notwithstanding.

As noted earlier in the week a flat result was what I expected to see, and pretty much a flat result so it was. 

Total employment decreased by -5,100 in the month on a seasonally adjusted basis to 11,769,900, which equates to a pleasing increase in employment of a  +230,100 over the past year.

This represents a gain in total employment of +2.0 per cent, and thus with the rate of population growth in Australia now looking set to track down to around just +1.2 per cent, the unemployment rate should in theory be at least holding its ground.

On a trend basis employment increased by +12,400 in September following on from a gain of +16,200 in August.

Zooming the chart in to a five year time frame you can see that the trend increase in employment over the past year has been robust at +232,400, which is the strongest level of employment growth in four years.

Part time employment fared better than full time employment, however, and there is certainly a little more to the headline data than meets the eye.

NSW is adding jobs for fun

At the state level, New South Wales has added a massive +123,000 jobs over the past year, with total employment rising by another +35,900 over the past quarter.

Heading into this cycle with both an infrastructure and dwelling deficit, many of Sydney's economic indicators have been dialled up including everything from construction to employment, demographic trends, retail trade and new motor vehicles sales, to name a few.

It has been a predictable (and predicted) boom for those paying close attention.

Job vacancies figures for New South Wales also point to a strong period for the labour market ahead. 

Annual employment growth was also solid in Victoria (+54,200), Queensland (+38,700), while there were moderate increases in total employment in Western Australia and Tasmania.

At the other end of the scale, it was not such a happy story for South Australia where an accelerating employment shock saw total employment drop alarmingly in September (-8,400) - mostly full time jobs - to be down by over the past year (-5,300).

Barely a week seems to pass without more job cuts being announced for SA, and this month it was the turn of Santos to announce redundancies in relation to office-based roles in Adelaide.

Full time employment in South Australia is now lower than it was eight years ago.

Over the past five years while NSW has added well over a quarter of a million new jobs (+255,400), while unfortunately South Australia has gone backwards. 

Unemployment steady

The trend rate of unemployment in Australia has now been sitting steadily in the 6.1 to 6.2 per cent range for 16 months.

At the state level the trend unemployment rate has declined handsomely over the past year in Queensland, Victoria and particularly Tasmania, with the Apple Isle evidently enjoying the weaker Aussie dollar. 

On the flip side the trend unemployment rate has been heading up in South Australia - sharply - and in Western Australia.

The wrap

Overall, not a bad result, with the New South Wales economy dominant.

Indeed interest rate settings remain too low for Sydney, but the demands has been so weakened in many of Australia's resources and manufacturing regions that cash rate futures markets have been pricing implied yields of well under 2 per cent right through until mid-2017.

There were no particular implications for monetary policy in this release, but there have been murmurings about downward revisions to growth forecasts and even an interest rate cut as soon as next month, so strap yourselves in.

The Reserve Bank of Australia (RBA) will release its Financial Stability Review (FSR) on Friday morning, which will be one document well worth paying close attention to.