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

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Friday, 20 November 2015

Mining regions struggle

NSW leads employment gains

The ABS released its Detailed Labour Force figures for October 2015 which provided further detail on the extraordinary rate of job gains in New South Wales, where employment has grown at an electric pace over the past year. 

Sydney recorded another strong month of gains and has created +85,000 positions over the year to October. Interestingly after a fairly dismal four years, the rest of the state has also created +51,000 new roles. 

Of Australia's other major labour markets Melbourne (+78,000) and lately the improving Greater Brisbane region (+43,000) have accounted for the bulk of new positions.

By contrast over the past five years since October 2010 total employment in Adelaide has declined by 5,500.

Unemployment divergence

Looking at capital city unemployment rates on a rolling annual basis shows that while unemployment rates are rising in Perth and Adelaide, elsewhere they have been declining.

Sydney has been the king of employment gains in recent times, and as such recorded an unemployment rate for October of just 4.7 per cent across the Greater Sydney region.

Over the past year some of the consistently lowest unemployment rates in Australia have been seen in Sydney's Northern Beaches (2.5 per cent), Eastern Suburbs (3.2 per cent), North Sydney & Hornsby (3.7 per cent) and Inner West (4.3 per cent).

At the other end of the scale the unemployment rate in Adelaide continues to trend up to well above 7 per cent, with further jobs losses subsequently reported in the month of November in the struggling state of South Australia.

After a lift in unemployment as the resources capital expenditure boom passed its peak, Greater Brisbane has seen a pleasing improvement in its local economy.

Employment gains have picked up to a solid pace and the rolling annual unemployment rate has trended down from 6.3 per cent to 5.9 per cent through this calendar year to date.

Mining regions suffer

Commsec put out a usueful reseach note which reported that mining regions - and coal mining regions in particular - have suffered, with jobless rates in the Hunter Valley and Mackay having broadly doubled.

This in itself comes as no great surprise - I predicted as much here on this blog 14 months ago.

Other regions with elevated levels of unemployment have included Wide Bay, Logan-Beaudesert, Adelaide North, Townsville, and Cairns.

The news for regional Australia is far from all bad, however.

While there is no doubt that many parts of regional Queensland are doing it very tough, there have been improvements in unemployment rates in the Wide Bay region, the Hunter Valley, Newcastle & Lake Macquarie, and Geelong (and possibly several other regions, subject to the vagaries of sampling variability).

Indeed, after some ugly results early in the year the figures reported for regional unemployment have generally improved of late, so perhaps some of the mining fallout is now in the rear view mirror, as contractors migrate back to their respective capital cities.

That said, total regional employment growth outside New South Wales (and to some extent Queensland) has been weak, while new roles may also be lower paid than those which they replaced.