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

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Thursday, 25 August 2016

Three capital cities are adding more than 80 per cent of jobs

Employment growth

The Detailed Labour Force figures released by the Australian Bureau of Statistics today showed that Australia added just over 220,000 jobs over the year to July 2016, bringing total employment close to breaking through the 12 million barrier. 

That's a good headline result, but with part time employment employment rather too dominant.

Unemployment easing

Sydney has the lowest unemployment rate of the main capital cities at 4.7 per cent, and is also home to the lowest sub-regional annual average unemployment rates, with its eastern suburbs clocking in at 2.7 per cent, and the northern beaches 2.8 percent for the year to July. 

These figures underscore the ongoing strength of the New South Wales economy.

Annual average unemployment rates continue to trend down in Greater Melbourne (5.9 per cent) and Greater Brisbane (where the rolling annual figures show unemployment shaping all the way down from 6.3 per cent to just 5.6 per cent since 2014). 

Greater Adelaide has been hovering at the highest annual average unemployment rate of 7.3 per cent.

Regional markets are experiencing mixed fortunes, with Townsville recording one of the highest annual average unemployment rates over the past year at 9.7 per cent. 

Mandurah (10.6 per cent), Cairns (8.6 per cent) and Ipswich (8 per cent) represent some of the other regions where average unemployment rates have been too high for comfort over the past year. 

On the other hand, some regional markets such as Geelong - which comfortably wins the most improved award - have fared very well over the past year, with more than 20,000 jobs added on a net basis, and a substantial decline in the annual average unemployment rate to just 5.4 per cent. 

WorkSafe jobs would be part of this, but since labour force figures represent where people usually reside rather than where they actually work, it's likely that many of these 'new' jobs are based in Melbourne, with folks opting to commute from a cheaper location.

Where are the jobs?

Greater Sydney (+61,500) and Greater Melbourne (total employment +84,700) have continued to add the bulk of jobs over the past year, while parts of the regional New South Wales (+29,400) economy have fared reasonably well. 

Excluding Geelong, however, regional Victoria is going backwards. 

Total employment in Greater Brisbane (+30,800) continues to grow robustly, with inner city Brisbane having one of the lowest unemployment rates over the past year at just 3.7 per cent, but there's not much of note happening elsewhere. 

Over the past year two in three jobs have been created in Sydney and Melbourne, and more than 80 per cent of employment growth has been seen in three most largest capital cities, being Greater Sydney, Melbourne, and Brisbane.

The wrap

Overall, the three most populous cities are accounting for such a high share of employment growth that unemployment rates are low in historical terms.

Moving around the country, however, it's clear that there is oodles of spare capacity as the resources sector comes off. 

In the absence of significant inflationary pressures, Commsec is pencilling in another interest rate cut for November, while the cash rate futures implied yield curve doesn't bottom out until the fourth quarter of 2017.