Pete Wargent blogspot

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

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Friday, 19 February 2016

Participation rate up

Participation rate

Yesterday's employment figures showed that the participation rate lifted to 65.2 per cent, while the participation rate for the prior month was also revised up to 65.2 per cent.

This was the highest participation rate for nearly four years, and the driver was a huge jump in the participation rate in Queensland, from 65.8 per cent to 66.3 per cent.

Monthly data can be somewhat volatile, of course, but the smoother trend figures charted below point towards a similar development, with participation now rising solidly again in Queensland (up from 65.2 per cent to 66.0 per cent over the past year).

Meanwhile, look at the trend participation rate for New South Wales go, increasing from 63 per cent to 64.4 per cent over only the past year!

In fact, the trend participation rate for New South Wales has never been higher across the entire data series from 1978.

On the downside, the labour market seems to have been depressed in South Australia for half a decade now, while having apparently threatened a recovery the jobs market in Tasmania seems to have turned a little...well, green. 

It is generally not a good idea to look at any one indicator in isolation, but employment-to-population ratios hint towards similar trends, which is a steady rebound in Queensland as the state picks itself up off the mat post mining boom.

New South Wales scores highly on this measure too.

Over the past six months the economy has created +143,400 jobs, off which 43 per cent were in New South Wales and 38 per cent in Queensland. 

My take on this?

Well, New South Wales has indeed added tens of thousands of jobs, but in recent months many have been part time positions, so all is not quite as amazing as it seems. 

As for Queensland, my suspicion is that many of the jobs created have been in or related to residential construction - a cyclical industry - and many have been within the blossoming tourism sector.

The latter point might imply that plenty of the work created has been casual in nature, although Queensland has also created +34,700 full time jobs over the past year, for a solid gain in full time employment positions of +2.2 per cent.

Hours worked

A look at the total hours worked chart backs this up to some extent. New South Wales is miles out in front, with a massive +6 per cent gain in trend total hours worked. 

Queensland has instead been a solid performer, with a +2.2 per cent increase in trend hours worked. 

The next few years could be uplifting for Queensland in the lead up to the 2018 Commonwealth Games at Gold Coast, and the state should enjoy the lower dollar which will bring tourism gains, particularly from China, and much-needed support to export values. 

As I looked at in more detail here, resources construction in Queensland was some 57 per cent below its peak by September 2015, and it will be a huge relief when this enormous drag is finally fading into the rear view mirror.

With the Gladstone natural gas venture now kicking into gear and the first shipments underway, GLNG exports will begin to make a welcome positive contribution in 2016 - it would be very handy if the relief rally in commodity prices continues!

A look at the latest International Trade figures shows that over the past three months Queensland has produced a positive trade balance of around $1.2 billion per month, after churning out several negative prints in 2014.