As ever last week’s jobs data revealed some interesting variances at the state level and an overall soft picture.
The monthly figures are proving to be most unreliable, but comparing September’s data to where total employment was at back in June (i.e. before the seasonality complications kicked in) shows total employment to be a little lower in South Australia and Tasmania, and quite a lot lower (-19,800) in Queensland.
I read somewhere recently that property investors should buy in Brisbane because “unemployment is falling”.
I don’t know where other people pull their information from, but that’s not what the official statistics have shown in recent years.
That said, as a property market Greater Brisbane does indeed appear to have some of the brightest prospects in the decade ahead in Australian property markets, with Residex forecasting 6%+ capital growth per annum for the next eight years – note that due to the compounding effect that is the equivalent of house prices booming by a massive 59 percent on today’s values.
6 percent plus capital growth per annum implies that Brisbane’s median prices would double in perhaps only a dozen years according to John Edwards’ forecasts.
Given that experienced investors always aim to comfortably outperform median capital growth rates, these are huge predictions by Residex.
Trend by state
Given the recent volatility in the labour force data, it’s best to try to get a feel for what is happening from a bit more distance.
The total employed chart shows that the southern states have demonstrated no jobs growth for years now, while New South Wales in particular has been adding jobs aplenty.
Over the long haul it is abundantly clear that the four largest states by population today have driven the great bulk of the jobs growth, with the mining boom playing a key role.
The 5 year cumulative increase in total employed figures show why I remain dubious about the strength of the South Australian economy.
The economy has not added net employment at all which will show itself in an elevated and rising unemployment rate in the state, and that is never a good sign.
If there is one set of data which outdoes itself on the volatility stakes it is the unemployment rate by state. The trend clearly remains one of steadily rising unemployment at this juncture, and thus any real or imagined threat of imminent interest rate hikes has surely receded.
Drilling into the unpredictable 5 year unemployment rate chart below shows that the unemployment rate remains too high for comfort in Tasmania (7.4 percent), Victoria (6.7 percent) and South Australia (6.5 percent) in particular.
Despite the mining boom having passed its peak, the rate of unemployment remains low (if trending up) in Western Australia at 5.0 percent, while Westpac has called the New South Wales unemployment rate as having peaked at 5.8 percent, which is welcome news for the First State.
Overall it’s a soft set of numbers, with the southern state economies looking very weak and their respective outlooks rather bleak, particularly for manufacturing.
Meanwhile significant challenges will also continue to face those regions with a mining focus.
As for the monetary policy outlook, with the labour market evidently remaining soft with plenty of slack, interest rates still appear as likely to fall as anything else, as I pondered here only last week.