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City versus regional jobs divide widens

The ABS released its Detailed Labour Force figures for the month of June 2015 which confirmed an ongoing trend towards capital city employment and regional unemployment.

Part 1 – Sydney economy strong

Total employment in Sydney has increased robustly over time to around 2.5 million, while regional employment has been stuck around 1.2 million for half a decade now.

It’s largely a similar story between Melbourne (2.3 million employed) and regional Victoria (671,000).

Part 1 - Sydney economy strong

The cumulative employment growth chart shows that while there was some decent regional employment growth through the latter stages of the mining investment boom, this has now stalled over the past half decade.

The cumulative employment

Consequently there is a gradual but definitive divergence taking place between city and regional labour markets.

In June the Greater Sydney unemployment rate declined to just 4.7 per cent, but regional unemployment is still trending upwards.

The impact of the mining boom is stark.

Unemployment rate
The impact of the “once in a century” mining boom is stark when viewed in these terms. Alas those glory days are now in the past.

Part 2 – Adelaide’s struggles

That’s not to say that all capital city labour markets are faring well – Adelaide isn’t.

Adelaide's struggles

Total employment in Adelaide has now declined by 6,900 over the past four years as its manufacturing base is eroded.

Total employment in Adelaide
Part 3 – City versus regional divide

The monthly data for unemployed persons and unemployment rates is not particularly reliable, but smoothed on a rolling annual basis there has been a clear trend towards rising regional unemployment, particularly in Queensland and New South Wales.

City versus regional divide

With an unemployment rate of 7.6 per cent, Adelaide has the unenviable position of holding by far and away the highest capital city unemployment rate in Australia.

City vs. regional unemployment

Again, the monthly data is not particularly reliable, so below the capital city employment rates have been smoothed on a rolling annual basis. 

The data shows that low interest rates are working to some extent in Sydney where the unemployment rate has declined all the way to 4.7 per cent in June 2015. An unemployment rate downtrend is also in place in Brisbane (5.2 per cent) and Melbourne (5.8 per cent).

On the flip side, Adelaide is trending up concerningly, and Perth continues to trend up from a position of near full employment in Q2 2008.

Capital city employment rates

Although no longer included in my chart above, it’s a fair assumption that Darwin may shape upwards in a similar vein to Perth over time.

The wrap

Overall, employment growth is all about the capital cities these days, with close to three quarters of the net increase in employment accounted for by just four capital cities – Greater Sydney, Melbourne, Brisbane and Perth – since June 2010.

The wrap

Not so much doing elsewhere as the resources investment boom turns to capex bust and manufacturing continues to fade as a share of total Australian employment.



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About

Pete Wargent is a Chartered Accountant, Chartered Secretary and has a Financial Planning Diploma. He’s achieved financial freedom at the age of 33 - as detailed in his book ‘Get a Financial Grip – A Simple Plan for Financial Freedom’. Pete now manages his investment portfolio, travels and works as a consultant in the finance industry from time to time. Visit his blog


'City versus regional jobs divide widens' have 2 comments

  1. Avatar for Property Update

    July 23, 2015 @ 10:47 am Ben Loveday

    It looks to me that this is the major cause of property price escalation and home unaffordability in inner Sydney and Melbourne.

    Reply

    • Avatar for Property Update

      July 23, 2015 @ 1:09 pm Michael Yardney

      Ben, wages growth is one of the big drivers of property price growth and job uncertainty is definitely a negative for many regional property markets

      Reply


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