Glacial improvement

Tightening, slowly

I took a look here at the employment growth figures during the week, which broadly showed that the unemployment rate in Australia is back down to where it was in 2013. 

The number of unemployed persons dropped sharply in the month of May, down by 26,800 to 714,600, taking the unemployment rate down from 5.6 per cent to 5.4 per cent. 

So that's the good news. 

The state making the most substantial inroads lately has been Victoria, with the number of unemployed persons down to 174,400 from 208,500 a year earlier.

Very good news!

The unemployment rate in Victoria has declined accordingly to 5.1 per cent, down from 6.1 per cent a year ago.

So that's getting quite close to the 4.9 per cent of New South Wales. 

Like Sydney before it, Melbourne is enjoying the fruits of its construction boom.

Some progress, then, but overall there are still more than 700,000 out of work, and there remains plenty of slack in the labour force nationally. 

A look at the trend chart for unemployed persons underscores this point.

In October 2014 the two most populous states had a combined 442,900 unemployed persons, a figure that's since fallen by about 60,000 or 14 per cent. 

Elsewhere, however, in aggregate there's been little meaningful progress. 

With regards to underemployment, the the trend rate declined to 8.5 per cent in May 2017, which is a bit below peak of 8.7 per cent seen in 2017. 

Meanwhile, the underutilisation rate also declined by 0.4 per cent to 13.9 per cent over the past year. 

Just about enough evidence here to suggest an ongoing improvement.

But in a word: glacial.

Weekend reads: must see articles of the week

End of the week

Had an awesome at the 2018 Wealth Retreat at Gold Coast, with many new connections made and ideas discussed.

Find the must read articles of the week here at Property Update (or click the image below). 

Have a great weekend!

Sukkar on negative gearing

Assistant Minister Sukkar discussing our research report, as reported in The Australian today.

Assistant Minister Sukkar also took to 2GB to add a bit more texture - you can listen in here.

See me live in Brisbane next week

Breakfast included too, at the awesome Boucher restaurant.

Book your ticket here.

Unemployment rate falls to 5.4pc

Unemployment rate back to 2013 levels

Employment increased by a seasonally adjusted 15,900 to a new high of 12,522,300 in May.

That still wasn't enough to stop the annual pace of jobs growth slowing from a sizzling 3.4pc just a few months earlier to a still-reasonable 2.5pc.

And, importantly, the pace of full time jobs growth has faded over the past four months too. 

Melbourne and Sydney continue to create employment at a strong clip.

New South Wales has seen by far the greatest employment growth over the past year at 137,200, with Victoria (72,000) and Queensland (64,900) also performing well in terms of headline employment growth. 

The unemployment rate hit its lowest level in 6 months at 5.40 per cent, and is essentially as low as we've seen since January 2013. 

At the state level New South Wales (4.9 per cent) and now Victoria (5.1 per cent) look to be in good shape from an unemployment rate perspective. 

Overall, though, a bit of a flaccid result, with the annual growth trend in total monthly hours worked losing momentum in declining to 2.7 per cent. 

As you were, then, with the economy doing pretty well if you live in Sydney or Melbourne, and generally floundering along elsewhere. 

Some good news for Brisbane, with the massive $3.6 billion Queens Wharf project finally set to hit its straps, and 2,000 construction workers being hired. 

Not before time! 

Overwhelm!

Is a verb, in my book.

Anyway, here's how to deal with it.

Housing finance softer again in April

Investors squeezed

Total trend housing finance continued to soften in April 2018, down from $33.2 billion at the market peak in January 2017 to $32.1 billion, a total decline of 3.2 per cent. 

Total home lending is at the lowest level in around 1½ years. 

There's no doubting the drivers of this. 

Back in the first half of CY2015 the monthly trend for investment loans was temporarily tracking above $14 billion per month.

But the squeeze is now on, with that figure now down to $11 billion...and falling.

One interesting point of note is that lenders are quietly taking the brakes off for the upgrader cohort, with the derived average loan size for non-first homebuyers rising to $410,400 in April, comfortably the highest level on record. 

So for those homebuyers still borrowing, loan sizes are up and away. 

Furthermore, first homebuyer incentives are drawing first-timers in.

April is typically a seasonally soft month for market activity, but the annual number of loans written to first homebuyers is up by 63 per cent year-on-year in New South Wales and 29 per cent year-on-year in Victoria (albeit from depressed levels in Sydney's case). 

Finally for today, almost all indicators for residential construction are pointing to a significant slowdown in the second half of 2018. 

As detailed in our free Requiem for a Construction Bubble report, the construction sector is at its most bloated level in approximately a century, and we see this as the greatest risk for the economic outlook.

The timeliest indicators suggest a further deterioration in lending volumes likely took place in May and June. 

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The state level housing finance figures are covered in more detail in our monthly subscription reports. 

Labor tax plan to hit home prices

Our research with RiskWise at the front of the Fin Review today (paywall).