There is both good and bad news for jobs growth.
The Labour Force figures were released last week and they showed total employment jumping by a better than expected +2.0 per cent in the year to May 2015.
This was a considerably better than expected result, and Aussie share markets closed up by more than 1.4 per cent.
Let’s take a look at the employment figures in the usual 3 short parts…
Part 1 – Employment up
Total employment increased by a surprisingly strong +42,000 to a new survey high of 11,759,600.
Over the past seven months total employment has surged higher by +196,000, an impressive average of more than 28,000 per month.
The May result was comprised of +14,700 full time jobs, and +27,300 part time jobs.
So, a jolly good data print, all things considered.
Part 2 – State versus state
The May result was predominantly driven by a rebound in employment from previously weaker months in Queensland (+18,700), and an ongoing surge in New South Wales jobs (+15,300).
Over the past year employment growth has been driven overwhelmingly by New South Wales with a super-strong (+87,600), and Victoria with a similarly strong (+84,700).
On the flip side, the southern states are really struggling to gain any traction at all.
Tasmania has not created any employment growth on a net basis for fully half a decade, while South Australia has not added a single job since Virgin Australia was still Virgin Blue, all the way back in the first half of 2011.
Iron triangle “wiped off the map”
In March 2013 I spent oodles of time detailing in characteristically tedious fashion why real estate speculation in South Australia’s so-termed “iron triangle” (Port Augusta, Whyalla and Port Pirie) was bad idea, despite the repeated recommendations of other commentators, concluding in the final paragraph the potential for “severe financial loss”.
If you are so inclined, you can track back and find other similarly themed posts on this blog page dating from the first quarter of 2013.
Of course, nobody is really that interested in listening to such musings and warnings when mining investment is still on the way up, but now we are coming down the other side, things could get very messy.
Such is the nature of commodity cycles.
Median house prices in Whyalla have now declined by 9 per cent in the last 12 months to be lower than they were five years ago, with further adverse news in the post.
The median house price in Port Augusta is now a paltry $168,000 having declined horribly by 16 per cent over the past five years – a disastrous result – while unit prices have been crushed, down by a horrific 43 per cent to $117,500 over the same time period.
And over the past three years, the median house price in Port Pirie has dropped 11 per cent lower to just $187,500, despite a moderate recent bounce having been reported.
The last three years have been grim enough, but there is more sobering news in the post over the next three years, with it being announced today that Port Augusta’s two power stations and the Leigh Creek coal mine are expected to close by 2018.
This will cost another devastating 438 jobs, a terrible outcome for the local economy.
Coming in addition to a swathe of cancelled projects, it’s been a miserable time for much of the region.
Part 3 – Unemployment
Finally for today, moving on to unemployment, it was great to see the seasonally adjusted national unemployment rate declining to 6.0 per cent in May, while unemployment decreased by 22,000 to 745,200.
6 per cent is a 12 month low for the seasonally adjusted unemployment rate. ticking back from 6.3 per cent in January.
Even before today’s closure announcements, at the state level South Australia already had by a wide margin the highest unemployment rate at 7.6 per cent.
In New South Wales, the unemployment rate declined to 5.9 per cent, which merely underscores the strength of Sydney’s economy given the elevated levels of unemployment in Newcastle and the Hunter (also related to coal industry woes).
Queenslanders were heartened today to see the Sunshine State unemployment rate decline from 6.6 per cent to 6.3 per cent in May.
I’m not sure what’s happening with Western Australia, but the decline to 5.1 per cent just “feels” wrong (and the ABS essentially acknowledged as much in its release notes).
Smoothing the data on a 6mMA basis, we can see that Western Australia is still in an unemployment rate uptrend, despite today’s low-ball result.
The outlook has improved significantly for Tasmania as the Aussie dollar has declined, but South Australia’s economy continues to be in a real muddle.
Elizabeth in Adelaide is ground zero for capital city unemployment in Australia as the car manufacturing industry shuts up shop, but now we can add the disintegration of the “iron triangle” to the long list of challenges facing the state.
Overall, this was a very worthy headline set of numbers with another 42,000 jobs added, which suggests that low interest rates are to some extent leading to stronger employment growth, although perhaps jobs of the lower paying variety.
However, drilling down to the regional level we can clearly see that there is likely to be some blood on the streets, particularly in many of the resources focussed regions.