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Strong employment growth is good for the economy and property

The latest ABS figures show employment rose by a very strong 54,600 in November which is a strong sign for our economy and our property markets.

The annual pace of growth in employment has risen to 3.7%year on year and the unemployment rate fell to 5.2% from 5.4%, despite the participation rate rising to a new record 66.1% from 65.9%.

These figures highlight the RBA’s concerns for 2011. They are concerned that strong employment growth and wages growth plus the anticipated investment growth over the next few years will further stretch our resources and push up inflation. A strong economy is good for property prices and property investors but of course comes with the trade off of rising interest rates.

According to the NAB when looking at recent trends for population growth, a 15-20,000 increase in employment is required each month to keep the unemployment rate steady, if the participation rate remains unchanged.

There were gains in employment in all states except SA, with the biggest in NSW (+20,000) and Victoria (+17,000). WA has the lowest unemployment rate amongst the states (4.5%), while both NT and the ACT are at 3.1%



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About

Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


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