A new year, and a time to reflect on where we stand in Queensland. And as far as the pollies are concerned (while Parliament is yet to return) the emphasis appears, as ever, to be on spinning the data to make whatever point they wish. In today’s Australian we see the LNP (in the person of Deb Frecklington) claiming “more than 30,000 Queensland jobs have been shed in the past year” while the ALP (via an unnamed spokesperson) countered that the Government had “increased employment since its election” and noted that “unemployment is 5.9% now, not 6.6% where the LNP left it.”
So what’s the actual picture?
The current ALP Government were elected at the end of Jan 2015 so we have considered data (where available) since Feb 2015 as representing “since the election”. On this basis by Nov 2016 (latest available data) Trend employment is up by 22,800 and the Trend unemployment rate has fallen from 6.6% to 5.9% since the election (as the ALP spokesperson said). If we consider “in the past year” to mean the 12 months to Nov 2016 then Trend employment has indeed fallen by 30,900 (as noted by Deb Frecklington). As the chart below makes clear, the Government would much rather talk about “since the election” as this includes solid growth in their first year; while the LNP will focus on the weakness of the second year.
What we also see is that employment growth has failed to keep up with growth in the working population. The unemployment rate has fallen despite this weakness because the Participation Rate (the proportion of the working aged population who are either employed or counted as unemployed) has fallen from 65.2 ion Feb 2015 to just 63.9 in Nov 2016. To put some context around that number; this means that since Feb 2015 the working aged population in QLD has grown by about 92,000 while those in the labour force are only up by 8,000. Had the Participation Rate remained where it was at the time of the election we would have an additional 50,500 people in the labour force. Without additional jobs being created that would have resulted in an unemployment rate of 7.8% by Nov 2016.
It’s also worth noting that only about a third of the new jobs created since the election have been full-time, while almost half of the jobs lost in the past year have been full-time.
Overall the employment position in Queensland is complex. It’s certainly not “strong”. The Government’s first year was “positive” (largely on the back of Public sector jobs being replaced after LNP cuts in the previous administration) and the last year has been undoubtedly “weak” although recent months show some signs of improvement.
Recent data on Retail Trade shows Queensland doing well compared to the rest of the country, although this comes after a weaker first 18 months for the ALP Government.
Consumer confidence (as measured by the Westpac-Melbourne Institute Consumer Sentiment survey) has improved sharply over the past year after some dramatic declines in the months immediately after the 2015 poll and is up 4 points (from about neutral) since the 2015 election. This level of positivity within the consumer sector is evidenced when we consider the Household Consumption component within Gross State Product (see below).
Gross State Product
Treasury’s own quarterly data shows the State economy growing at a healthy 3.3% for the 2015-16 (although the official ABS data showed growth at a less impressive 2%…see here for a discussion about why these two numbers might be so different).
We have written extensively since the release of the most recent data on the impact of the private sector on Queensland growth, and in particular have noted the continued good contribution from Household Consumption and the return to positive territory for Private Investment (see here) so I don’t plan to repeat that here. Nevertheless it is evidently true that the real engine for growth in Queensland in recent quarters has been net exports as LNG exports come on line. State Final Demand (which ignores the international and inter-state components) is also improving and has finally turned positive again. The result for the third quarter 2015 was the strongest for Queensland since the start of 2013. (see here for full details)
The over-riding theme in the residential construction sector since the election has been the surge (and then subsequent slowdown) in unit approvals.
The lag between approvals and actual construction can be lengthy, so the impact of the ramp up in approvals seen until earlier last year is still likely to be reflected in a stronger construction sector. Nevertheless, the dramatic slowdown in unit approvals (particularly evident in Brisbane and the SE) will have flow-on effects to the construction sector as we move through this year.