The Australian Bureau of Statistics has just released its Labour Force statistics for January 2011, showing our unemployment rate remained unchanged at 5.0%.
But digging deeper into the figures revealed employment participation now at an historic high of 69.5% and that Australia created an additional 330,000 jobs over the last year, almost 264,000 of which were full-time positions.
Putting this into perspective – over the past five years Australia has created an average of 271,209 jobs annually and on average almost 159,000 of these jobs were full-time jobs. Yet in the last year we created 264,000 new jobs, showing how strong our economy is.
The question investors should be asking is: with our economy likely to continue to be strong on the back of our resources boom and now that we are at what most would consider full employment, what are the implications for our economy and our property markets?
And like most things in life the outcomes will be both good and bad …
Firstly it is likely that competition for skilled employees will lead to wage increases. And this will flow through the economy in a number of ways.
When people feel secure in their jobs and wealthy they tend to spend more. Think about it…higher wages generally leads to increased discretionary spending due to increased disposable incomes. People spend on new gadgets, new cars and new houses.
This is likely to have an inflationary effect and will lead to rising interest rates later in the year.
The good news is that full employment will underpin our property markets.
Sure our property markets have stalled, but with full employment and few people having difficulty keeping up their mortgage payments, property prices will not drop dramatically as some overseas commentators are suggesting.
While the flat property market will mean people may not move home as often, Australians are more likely to use their increased disposable income to renovate their homes and increase the value of their properties.
What about immigration?
These job numbers also means our government will need to revisit the immigration debate, because it should be fairly obvious that we need more skilled labour.
Over the five years to June 2009, Australia welcomed an average of 237,180 overseas migrants each year. At the last election the Federal Government announced that they were planning to cut migration back to around 170,000 people annually.
With the unemployment rate already tight, participation rates at all-time highs, more baby boomers reaching retirement age and fewer migrants coming to Australia, who is going to fill all these jobs we keep creating?
As I’ve mentioned in previous blogs, we really have no choice. We need to increase the number of skilled immigrants coming to Australia.
Remember the majority of these new Australians will move to our main capital cities where the jobs are. They are all going to need to live somewhere and they will either rent or buy a property. Skilled immigrants tend to bring with them considerably more money than unskilled immigrants and they are more likely to buy a new home.
In fact many will be happy living in apartments, considering they have come from countries where high-density living is the norm.
Putting all this together – the outlook for property is positive as our strong economy and prosperous society underpins our real estate markets.
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