Yesterday huge gain in total employment were announced.
The Labour Force data showed total employment leaping by an outlandish 121,000 in the month of August, the greatest net gain in the history of the data series which runs all the way back to 1978.
Most of the gains were of the part-time nature, reported full-time employment increased by 14,300 and part-time employment by 106,700.
Of course, the data represents only a survey and therefore the results are necessarily volatile and should not be taken too literally.
The huge variance against expectations will do little to enhance the credibility of the survey’s accuracy.
In particular, the huge boost in part-time employment seems likely to be largely a result of sample rotation.
Nevertheless, such a large gain in employment must be reflective of at least some good news in the economy.
1 – Total employment jumps
The total employment gain was welcome news after a weak result last time around (click charts to expand).
Over the past year total employment has increased by +128k for females and +111k for males.
Zooming in the total employed chart to a 5 year time-frame shows what a truly anomalous result the August gain was – a monster uplift in reported total employment.
Clearly the monthly data is noisy but the economy must be doing something right for total employment to continue its right to the highest level in Australia’s history at more than 11.7 million.
2 – Total employment by state
More interestingly, what is happening at the state level?
The month of August showed the New South Wales economy to be leading the way with a hefty gain in total employment (+45k) albeit with the majority of that fueled by part-time employment gains.
Queensland (+27k), Victoria (+26k), South Australia (+17k), Western Australia (+10k) and Tasmania (+4k) also each benefited to a greater or lesser extent in the month (question marks over the integrity of the data notwithstanding).
The cumulative jobs added by state chart below is very much a three horse race, with New South Wales, Victoria and Queensland leading the way, although over the past four years the momentum is all with Sydney.
South Australia and Tasmania (which I haven’t charted here) have lagged badly for the past half decade although the August data proved to be reasonably good in both cases.
Sydney’s economy currently stands to benefit from a major construction boom. Of course, as the boom is largely of the residential property nature, property owners would be wise to keep a watchful eye on oversupply risk.
Our latest data shows that on a city-wide basis the Sydney market remains relatively tight with a vacancy rate of only 1.8 percent which is well under the national and capital city average of 2.3 percent. Certain inner west and Canterbury-Bankstown suburbs have vacancy rates which are far lower again at below 1.5 percent.
However, there are some areas we do highlight as having significant oversupply potential, particularly for new apartment stock around the Central Business District, the inner south and surrounding some of the Urban Activation Precincts (UAPs). Caveat emptor.
3 – Unemployment rate by state
Commentators reserved much of their scorn for the unemployment rate by state which continues to leap around in manic-depressive fashion.
The national unemployment rate month dived from 6.4 percent to 6.1 percent on a seasonally adjusted basis, reversed much of the previous month’s spike.
This month threw out some particularly wild unemployment rate changes at the state level, but users of the data would be wise to observe the trend rather than the noise, which remains up, albeit on a somewhat shallower basis than previously implied.
The August data showed unemployment rate falls across the board with Western Australia (5.0 percent) and New South Wales (5.7 percent) recording the lowest rates.
The data recorded some enormous falls in August with South Australia and Tasmania in particular seeing a colossal drop in their respective unemployment rates despite an overall increase in the participation rate.
Lovely to see but most commentators will be unlikely to suspend their disbelief based upon one month of noise.
Summary and property market implications
A literally unbelievably good boost in total employment must at least mask some positive news in the wider economy, but of course we would want to see any trend confirmed over time rather than becoming too aroused by one rogue print.
Cash rate futures and currency markets responded with further interest rate cuts now totally priced out of the yield curve.
With monetary policy settings at the current level we of course have expected to see dwelling prices rising across Australia but there remain serious question marks as to how sustainable gains in this cycle can be in most cities and regions.
Sydney and Melbourne have been boosted by an apparent explosion in demand from offshore funds and tomorrow’s Lending Finance data we expect to see showing that Sydney is also the domestic speculator’s paradise in this cycle.
Commentators for some time have reported that Sydney’s cycle is over with investor demand being pulled forward.
What they failed to account for is that equity gains create new deposits, and we are seeing plenty of evidence of refinancing in order to clamber aboard the Sydney property bandwagon at the present time.
On the other hand, there will be no such explosion in demand elsewhere and hence no equivalent property boom, and this was backed up further by today’s Labour Force report.
Total employment has been trending down in the Northern Territory for the past five months while the 2014 employment data flowing out of Canberra has proved to be flatter than a gander’s arch.
The August employment data for South Australia and Tasmania was reasonably positive but the five year charts look dire.
Meanwhile, Western Australia appears to be holding up reasonably well but is clearly a state in transition from mining construction to production.
Overall this property cycle possibly has a little way to run yet, but gains outside Sydney are likely to be relatively disappointing as compared to the property booms of Christmases past.