Pete Wargent blogspot

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

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Sunday, 26 June 2016

Jobs and growth?


The ABS released its Detailed Labour Force figures for May 2016 which showed that regional New South Wales has picked up the mantle from Greater Sydney in creating employment over the past 12 months.  

Regional New South Wales (+79,300) outpaced Sydney (+63,700) for the first time in a long old while. 

Jobs have been created in the Illawarra, Hunter Valley, and Newcastle, although nearly two thirds of jobs created in the state in the year to May were part time in nature, suggesting that plenty of slack remains in the labour force.

Greater Melbourne created +57,200 net new jobs, and Brisbane +20,000, but there's not been much doing elsewhere.

Looking at the national picture shows that NSW is the only state creating meaningful employment growth in its regional areas, at least in aggregate - some parts of regional Queensland are thriving, most notably Gold Coast. 

One of the reasons that these regions of New South Wales have fared better through the mining downturn than, say, some parts of regional Queensland, may be that they are contiguous with the Greater Sydney region.

Infrastructure Australia notes that the capital cities and a number of nearby peri-urban locations are likely to benefit from the bulk of investment over the next few decades.

House price correction

Housing markets is some less well connected regional towns and cities are struggling.

It's almost impossible to get a read on what is happening to dwelling prices in Roma given that barely anything is transacting, but when rents crash by well over half this typically does not bode well. 

Source: All data from SQM Research

House prices in Chinchilla are down sharply over the last three years too.

Dalby is another thin market, but rents are down sharply here.

Whyalla a similar story, both for rents and dwelling prices.

And so on...

Unemployment rates

Looking at the main capital cities, plotted in rolling annual terms, Greater Sydney (5.03 per cent) and Brisbane (5.72 per cent) have reasonably low unemployment rates, while Adelaide is tracking at a somewhat elevated 7.43 per cent.

Townsville doing it tough

The ABS also releases figures across a range of sub-regions. At the present time Townsville is doing things tough, with consecutive unemployment rate readings of above 13 per cent.

History shows that sub-regions rarely record such high unemployment rates for long periods of time. 

Either the economy recovers, or workers become discouraged, or workers relocate elsewhere for employment. 

It's too early to say for certain which route Townsville is heading down - the total size of the labour force has shrunk by nearly 20 per cent since 2011, but the city and region does have diversity of employment, which helps. 

The number of persons employed in the Townsville region has shrunk by more than a quarter since the end of 2010. The monthly data is unreliable so the moving average line takes out the noise - hopefully we'll see a rebound here soon.