Cairns employment growth slows; unemployment rate up on back of female jobless

The Trend of improving employment data for the Cairns region that we have been discussing this year appears to have come to a halt. Today’s release from the ABS of unadjusted labour market data for May has the headline unemployment rate in Cairns jumping to 9.8% (from 6.8% in April) despite strong growth in the number in work (+1,100 for the month). However, as readers will be well aware, these unadjusted regional numbers are so volatile as to be almost useless; instead we must focus our analysis on the Conus Trend.

The Trend shows that employment growth in Cairns has slowed in the past few months. May saw just 200 new jobs, April 500 and March 1,000. So far this year there has been a total increase in Trend employment for 3,500, so this month’s data shows a slowing to well below the monthly average of 700. The growth in jobs has been met (not unexpectedly) by an increase in the Participation Rate and that has therefore made a decline in the unemployment rate harder to achieve. Trend PR has increased to 61.1 (up 1.8 in the past 5 months) as more people join the labour force. As a result the Trend unemployment rate has increased to 8.0% (April was revised up to 7.8% from 7.2%). In Trend terms Cairns now sits as the 4th worst Trend unemployment rate in QLD behind Wide Bay (11.3%), Logan-Beaudesert (9.9%) and Mackay (8.4%). Considering the Employment/Working Population measure (see the chart below) we see that this increase in jobs and PR has seen a steady improvement in this measure over the past few months, although it remains very weak still.

When we consider the gender breakdown in the Cairns data we see that the female Trend unemployment rate has jumped sharply to 7.7% (from 7.1% in Apr which was revised from 6.2%), again on the back of an uptick in female Trend Participation. The Trend male unemployment rate has actually fallen slightly to 8.3% (from 8.4% in Apr). As the chart below makes clear, the pattern of the Trend unemployment rate for the sexes being in opposite directions continues to play out.

The gradual improvement of the youth unemployment situation seems to continue, although the data is rather mixed. The Trend youth unemployment rate has fallen to 18.3% (from 19.4%, although previous months have been revised higher). The 12 month moving average unemployment rate has seen a slight increase to 21.4%.

To our south things also look bleak. Trend employment in Townsville fell by 800 (the fifth consecutive month of declines) and Trend jobs now stand a full 3,000 below where they were at the start of the year. However, in a mirror image of the situation in Cairns, a decline in Trend Participation in Townsville has seen the Trend unemployment rate actually coming down in recent months. In May the Trend rate stood at 7.8% (unchanged from Apr but down from 7.9% in March). Over the past 5 months the Trend PR in Townsville has fallen by 2.4 to 65.3. The Trend Employment/Working Population measure, while still higher than Cairns, has been weakening.

The full Conus Trend data set for labour force data for all the regions in Queensland is available for download below. Please feel free to use this data as you wish but if you do so please acknowledge Conus. The Conus Trend data for the gender split in Cairns is available on request.

QLD Regions Jobs data – Conus Trend May 2015

UPDATE. Following some discussion on this post (see comments) Mark Beath at Loose Change has taken a look at the possible linkage between the level of the A$ and how that might impact the differential between the Cairns unemployment rate and that in QLD more generally. i.e. does a weaker A$ (and the associated positive effect on tourism) have a positive impact on employment in Cairns relative to the rest of the state? The answer appears to be “maybe”.

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4 replies
  1. Gene Tunny
    Gene Tunny says:

    Interesting charts, Pete. A couple of observations. First, the change in participation rates recorded don’t make a lot of sense and must simply reflect sampling error. The ABS possibly doesn’t take too much care in matching incoming and outgoing households into the LFS at a regional level, being more concerned about the national data. Hence you can end up with big movements in participation rates at a regional level. This is merely speculation, however, and something I keep meaning to look into. I’d note that the ABS probably only sames a few hundred households at the most in the Cairns region. Second, I wonder what the natural rate of unemployment in Cairns is? I expect it would be higher than Qld’s because of greater casual employment and friction in the tourism-dependent labour market. That said, I’d guess the natural rate is much lower than 8% where the Cairns unemployment rate appears to have settled for the moment.

    Reply
    • Pete Faulkner
      Pete Faulkner says:

      Gene, Thanks for the comments, useful and interesting as ever.
      Agree that the small sample size for the regional data set will always cause issues around reliability but unfortunately I don’t see that changing any time soon…no mention of “improving regional data” in the White Paper, so in the meantime I’ll just stick to my own Trend.
      The shifts in Trend PR, while quite large, I think are probably not too far off the truth. The improvement in employment opportunities in the region was always likely to result in some shift back into the workforce (particularly in the female workforce?) from what were very low levels.
      As for a “natural unemployment rate” for Cairns I’d certainly agree that it might be somewhat higher than at a state or national level. But, as the graph demonstrates, there was a significant period in the early 2000’s (and before) when it sat well below state averages. I guess that if we accept a NAIRU nationally at about 5% then you might expect a rate in the Cairns region to settle between 5-6%?…just a guess, but certainly lower than 8%! Cheers

      Reply
      • Mark Beath
        Mark Beath says:

        The Cairns unemployment rate was below Queensland for several years in the early part of the series. That was also a period of a very weak exchange rate and low commodity prices in the aftermath of the Asia crisis and strong $US. I have previously done a graph of the Cairns – Queensland unemployment rate differential and if you really wanted to you could overlay a correlation with the exchange rate between these different periods although the correlations and causes may be a bit of a stretch.

        Reply
        • Pete Faulkner
          Pete Faulkner says:

          Thanks Mark. That would be an interesting exercise although, as you say, the correlations might be a stretch. You’d have to think that a weak A$, and the tourism improvement that would bring, would certainly be a major factor in relative labour market strength in this area. Thanks for the comment.

          Reply

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