New Conus Trend Regional Industry Jobs series

The ABS present quarterly data for industry employment at a regional level. However, the data they supply is only available on an unadjusted 4-quarters average basis for the SA4 regions. This means that the data as presented paints a very delayed picture of the actual employment reality within the regions. For some time we have been working on creating a more timely, and relevant indicator of regional industry employment data. Today we launch the result of that work; the Conus Trend Regional Industry Jobs series.

To create something that is more timely than the original ABS average we first had to dis-aggregate the 4 quarter average data to derive actual quarterly numbers. Those derived quarterly numbers were then adjusted and trended using an X-12-ARIMA model and further adjusted for consistency with the overall Queensland Trend industry data for the quarter (which we created using the original quarterly ABS original data at a state level). What we’ve ended up with is something that, we believe, a far more relevant and timely indicator of industry based employment levels than has previously been available at the regional level.

It should be noted that the Conus Trend Industry Jobs series for the regions will not be directly comparable with the Conus Trend Jobs data since it is based on quarterly (not monthly) data.

The graphs below give us an idea of in which industries jobs have been created (and lost) over the past 12 months in Cairns and Townsville.

As we can see Public Administration jobs have been a significant growth sector in both regions. They have both also seen good growth in the “tourism” sector of Accommodation & Food, while Cairns has also witnessed healthy growth in the Manufacturing sector. Unlike the state as a whole, Retail Trade has been positive in both regions (particularly in Cairns).

When we consider Greater Brisbane with the Rest of Queensland there are dramatic differences.

Again, growth in Public Admin jobs has been significant, but in Greater Brisbane this growth has been exceptional. Without the Public Admin jobs growth Greater Brisbane would have seen a decline in total employment. Construction and Accommodation & Food have also been strong performers in the Rest of Queensland. Note the declines in Retail Trade in both Greater Brisbane and Rest of Queensland in contrast to Cairns.

 

Regional jobs data shows Rest of Queensland improving better than Greater Brisbane

The ABS regional jobs data for May was released this morning and we have completed our Conus Trend analysis. What it shows is the regions doing far better than Greater Brisbane on almost all measures.

Over the year to May Trend jobs were up 31,000 in QLD, but 23,400 of these were added in the Rest of Queensland with just 7,600 in Greater Brisbane. Even more impressively the Rest of Queensland saw full-time jobs up 11,400 while they fell 10,500 in Greater Brisbane. The result is that the Trend unemployment rate in Greater Brisbane is now at 6.4% while in the Rest of Queensland it is 6.0% (its 6.3% in the state as a whole).

In our own region we also saw good numbers. Cairns Trend employment was up 400 for the month (with 1,100 new full-time positions) and up 9,800 fore the year (5,900 of which are full-time increases). With the Participation Rate increasing slightly (after revisions) to 62.0 the Trend unemployment rate has actually nudged slightly higher in May to 5.8% (after April was revised down to 5.7%). As the labour market in Cairns improves and we see participation increasing it is to be expected that the unemployment rate is unlikely to fall further, particularly given it now sits well below the state average.

In Townsville the recovery continues to gather momentum. Trend employment was up 1,200 in May (full-time accounted for 700 of those) and up 11,800 for the year (8,900 full-time increases). Trend participation here was revised lower last month so ,despite a small tick higher in May (to 60.6), the solid jobs growth sees the Trend unemployment rate fall sharply lower to 6.3% (from a downwardly revised 7.3% last month). Townsville no longer figures in the bottom portion of regional areas in terms of Trend unemployment; the initiatives, announcements and improvements in confidence we have been talking about for some time have clearly had a dramatically positive impact.

Despite all this positive news, the graph below makes it clear that, once we allow for the declines in participation, there is still plenty of scope for improvements in labour conditions in both regions.

The full data-set of Conus Trend Regional Jobs is available for download below. Please feel free to use this (for non-commercial purposes) but we would appreciate you acknowledging Conus when you do so.

Conus Trend Regional Jobs QLD – May 2017

Today all saw the release of the quarterly industry employment data from the ABS. We shall be updating our new Conus Trend Industry Jobs data-set shortly and posting here once we have results.

Dept of Employment data confirms improvements in the Far North

Last week saw the release of the Dept of Employment Small Area Labour Market data for the March quarter. This series is based on ABS data as well as Centrelink and Census data and is the only reliable source of unemployment information at a Local Government Area level. However, the SALM series is based on a very different methodology to the ABS Labour Force survey data and as such cannot be compared directly to the ABS (or Conus derived) series.

Unfortunately the data is also only presented on a 4-quarters smoothed basis (i.e. the average of the previous 4 quarters) and as such is extremely lagged and slow to respond to changes in the underlying data. We have therefore been working on trying to tease out some more timely data signals from this series. We have done so by dis-aggregating the 4-quarters smoothed data to create derived quarterly numbers which we have then trended. The resulting Conus Trend SALM provides us with a far more timely indicator for labour force at a LGA level than we have previously had.

So far we have adopted this technique only for our own local LGA areas (Cassowary Coast and Cairns) as well as Townsville City Council, but aim to expand the coverage as resources allow.

The original SALM data shows the unemployment rate in CCRC falling from 7.6% to 7.1%. The Conus Trend SALM is less dramatic (largely because it started recognising the improvements earlier) and sees unemployment fall from 7.2% to 7.0%. Trend employment is up 633 over the course of the past year.

In Cairns Regional Council the original SALM has the unemployment rate falling from 7.1% to 6.7%; a similar story emerges from the Trend SALM with it down from 7.0% to 6.8%. Trend employment is up 3,680 over the year.

In Townsville the original SALM data continued to weaken with unemployment rising to 10.8% from 10.7% with employment down more than 5,000. However, as readers of this blog will be aware, we have been seeing clear improvements in the labour market in Townsville over recent months. These improvements are better reflected in the Trend SALM data where we see the unemployment rate stable at 10% but Trend employment up 1,760 over the year.

Strong jobs numbers but full-time in QLD are at a standstill

The ABS has shocked the markets with some very strong jobs numbers for May. The headline (seasonally adjusted) unemployment rate has fallen to 5.5% (its lowest level since Feb 2013) on the addition of a thumping 42,000 new jobs. The markets had been expecting the unemployment rate to stay at 5.7% and about 10,000 jobs to be added. All of those 42,000 new positions came in the full-time sector which was up 52,100. Participation also rose slightly curtailing an even sharper decline in the unemployment rate.

However, before we all start getting too excited we should take a moment to look at the Trend series (what the ABS recommends should always be done anyway). Here we see 25,200 new jobs added (and March revised slightly higher too) and an unemployment rate at 5.7%. Trend jobs growth over the past 12 months is averaging 16,200 per month, so the current pace of growth is certainly better than that. It’s worth noting that the Trend unemployment rate has been stuck between 5.7% and 5.8% since December 2015 so it would certainly suggest that the kind of move seen in the seasonally adjusted numbers may be somewhat over stated.

Queensland too saw better numbers although here things are decidedly more muted. Seasonally adjusted jobs were up 5,500 although full-time positions fell by 11,200. The unemployment rate fell to 6.1% (from 6.3% in March) with Participation stable. Again the Trend series paints a more reliable picture; jobs rose by 5,900 (after March was revised slightly stronger) and have been growing at an average pace of 2,600 per month over the past 12 months. Trend full time positions, however, are almost static having risen just 1,800 over the whole 12 month period. The Trend unemployment rate sits at 6.3% (unchanged in 5 months). As the chart below makes clear, although jobs are growing (and the pace has picked up over the past few months) the rate of growth is only just sufficient to keep up with population growth. The Queensland government will certainly be hoping that their “jobs Budget” earlier this week can have the impact on jobs creation it promises.

Regional jobs data for May will be released next Thursday. At this time we will be updating the Conus Trend Regional Jobs data sets as well as releasing our new Conus Industry Trend Regional data based on the quarterly ABS industry employment data for the May quarter.

The Participation Puzzle; the impact of demographic changes

Many commentators have written about movements in the Participation Rate (PR) and the impact this can have on unemployment rates (one such recent example from Nick Behrens at QEAS). The discussion is certainly a valid one, but in this post we want to try and dig a little deeper into what is actually driving the changes in PR.

Firstly, some definitions. PR is the percentage of the working age population (those 15 years and older) who are in the Labour Force (those either employed or counted as unemployed). Changes in the PR tell us something about the proportion of those able to be in the Labour Force who actually are, but the number itself tells us nothing about why the changes might be occurring. If we wish to understand more fully the structure of the Labour Force we need to look at the two factors at work determining changes in the net PR.

  • Changes caused by shifts in PR within the working population age groups
  • Changes caused by shifts in the demographic make-up of the Labour Force

Fortunately there is a way of splitting these two effects out from the data. The method was described and detailed in 2009 in a paper entitled Decomposing Changes in the Aggregate Labor Force Participation Rate written for the Federal Reserve Bank of Atlanta by Julie L. Hotchkiss.

The paper specifies the aggregate PR to be the population weighted average of the PR for different age groups. The difference in PR between different time periods (t and t-1) is therefore;

Where LFPR is the Labour Force PR; i are the age groups and p is the percentage of working age population.

The formula tells us that changes in PR between periods can be deconstructed into the change caused by shifts in PR within age groups (let us call this the “Propensity effect“) and change caused by shifts in the demographic make-up (which we shall call the “Demographic effect“).

The Propensity effect can be caused by a range of issues. The most often cited is the impact that a weak labour market will have in discouraging people from entering the labour force; the reverse is true when a strong labour market encourages people to return. However, this is not the only thing causing the Propensity effect. More young people opting to go into tertiary education, or staying longer in secondary education, would also shift the PR within their age group. Likewise more older workers opting for early retirement, or being forced to delay retirement, would impact on PR in that age demographic.

The Demographic effect is a result of shifts in the age make-up of the population. An aging population, as we are currently witnessing across much of the developed world, will shift aggregate PR as a higher proportion of the population moves into the older age groups where PR (naturally) is lower than in middle-age.

In order to deconstruct changes in PR we need to have data for PRs and population proportions for the various age groups considered. While the ABS provides us with aggregate Trend PR levels at a National and State level we have had to construct our own Conus Trend PRs for the chosen age cohorts^ (youth, 15-24 years; middle 25-44 years; older 45+ years) and utilise the Conus Trend Regional Jobs database to make comparisons at a regional level.

^ ABS Trend PR for the 15-24 age group is available at National level and used here.

The Results

We have opted to consider the period of a decade from April 2007 – April 2017. We need to look at relatively long periods of time if we are to see meaningful changes caused by demographic shifts.

In Australia over that decade Trend PR fell from 65.0% to 64.8%. The table below details the elements of interest within the relevant age groups.

PR p
Apr-07 Apr-17 Apr-07 Apr-17
Young 70.6 66.8 17.2 16.1
Middle 82.6 83.9 35.4 34.5
Older 65.0 50.9 47.3 49.3

Applying the formula above to this data we see that the Propensity effect actually increased aggregate PR by 0.3 ppts while the Demographic effect subtracted 0.5 ppts; the decline in PR between April ’07 and April ’17 was caused exclusively by demographic shifts.

We carried out the same process looking at Queensland and the results were quite different. Over the decade Trend PR in QLD fell from 67.4% to 64.6%. The Demographic effect accounted for just 0.7 ppts (or 26% of the total) of that decline while the Propensity effect subtracted the remaining 2.0 ppts. In Queensland it would appear that a weak labour force (perhaps with other factors at play…see above) has been the main driver to lower PR.

We also consider the Cairns region and found that Trend PR had fallen over the decade by 5.9% to just 61.6%. In Cairns the Demographic effect caused 1.7 ppts (29% of the total) of the fall while the Propensity effect caused the bulk (4.3 ppts) of that decline. Although the nominal impacts to PR are greater in Cairns it is worth noting that, as a proportion, the two effects had similar impacts at both State and regional levels.

When looking at Townsville, where the labour market has been particularly weak in recent times, we see Trend PR fell from 70.3% to 61.6% over the decade. However, here we see the Propensity effect having caused 6.9 ppts of the fall while the Demographic effect is responsible for just 1.8 ppts (20% of the total) decline. It would appear that the relative impact of the Propensity effect (perhaps caused by a weak labour market discouraging workers) in Townsville has been greater than at a State level.

Conclusion

We see that at a National level declines in Trend PR over the past decade have been caused exclusively by changes in the demographic make-up of the working population with PR shifts within age groups actually increasing PR. However, in Queensland it has been the Propensity effect that has been the major driver of lower aggregate PR levels. These shifts vary across regions but in the North we see a similar pattern at play, although on a greater nominal scale (perhaps not surprising given the tendency for regional data to be more volatile that aggregate State data).

Pete on radio 4CA this morning talking regional jobs and “lifestylepreneurs”

Pete spoke to John MacKenzie on radio 4CA this morning about jobs in Cairns. They also touched on a presentation in Cairns this morning from well-known commentator Bernard Salt in which he highlighted Cairns opportunities in embracing the growing trend for what he calls “lifestylepreneurs”. I’ll be posting in more depth on that fascinating presentation in the next few days. The Cairns Post had an article on the subject today (behind a paywall). You can listen to Pete’s interview below.

Conus Trend Regional Jobs data for NSW now available

We have today released the Conus Trend Regional Jobs data for NSW. The full data-set is available for download below (and on our Reports page with all our other Trend data). Please feel free to use the data (for non-commercial purposes) but we would appreciate you acknowledging Conus when you do so.

Conus Trend Regional Jobs NSW – April 2017

The data shows Coffs Harbour-Grafton with the State’s highest level of Trend unemployment at 9.0%, while Sydney’s Northern Beaches came in with the lowest at just 1.5%.

Regional Jobs shows Cairns slightly weaker; Townsville further improved

Today’s ABS regional labour force data for April needs to be looked at through the lens of the Conus Trend to make any real sense.

What the data shows us is Cairns slightly weaker while Townsville continues its trend of improvements (from a low base). The Conus Trend unemployment rate for Cairns now sits at 6.1% (up from 5.9% in March) which remains well below the 6.4% at a State level. Jobs remained virtually unchanged (less than 100 down) while the Trend participation rate eased to 61.6 (from 61.8). Over the course of the past 12 months Trend employment now sits 8,000 higher with annual employment growth of 7.4%. 6,000 of those new Trend jobs have been part-time with full-time up just 2,000.

To our south Townsville continues the trend of the past few months and sees good employment growth in April (up 1,700), although March’s gain was revised slightly lower (+1,800 from +2,200). The Trend unemployment rate now sits at 8.3% (down from 9.1% in March) but remains the second highest in the State. Over the past year Townsville has seen 9,800 new Trend jobs, which have come predominantly from full-time positions. Trend employment growth in Townsville now sits at 10.1%, which is the third fastest in the State.

Townsville is clearly recovering from the sharp downturn of last year, although it will be interesting to see whether uncertainty around the outcome of the Adani discussions (or the possible cancellation of the project) will impact jobs and confidence in coming months.

The Trend unemployment rate in Greater Brisbane edged sightly higher to 6.3% while it sits at 6.5% for the Rest of Queensland.

The Cairns Trend youth unemployment rate (which even after Trending remains a highly volatile series) sits at 16.1% up from 14.7% in March (which was in turn revised sharply higher). In Townsville the rate is 19.1% but this is now only the third highest rate in the State.

The full set of Conus Trend data is available for download below. Please feel free to use this data (for non-commercial purposes) but we would appreciate you acknowledging Conus when you do so.

Conus Trend Regional Jobs QLD – Apr 2017

New Conus Industry Trend data shows the problems Townsville faces

Each quarter the ABS produce data showing the levels of employment in each industry for the various labour force regions. Unfortunately this data is only provided on an unadjusted, 4-quarters average basis and as a result is a very lagged indicator. So, in the same way that we have been doing for some time with the monthly ABS regional labour force data, we wanted to produce a series, utilising this raw ABS data, that would give clients and policy-makers a more timely and responsive data-set when considering industry employment in the regions.

We still have some work to do before we’re ready to launch the full data-set for all the QLD SA4 regions (we anticipate a full launch in time for the next quarterly release of ABS data in June) but at this stage wanted to share with readers some initial findings with regard to Townsville.

To construct this data-set we have had to dis-aggregate the 4-quarters average data from the ABS. We’ve then adjusted and trended that dis-aggregated data to create the Conus Industry Trend for regional employment.

Looking across the 19 ANZSIC industry categories in Townsville, and comparing to the data from a decade earlier highlights the breadth of the slow-down seen.

We can see that only 6 of the 19 industry sectors have seen any increase in employment numbers (this during a period in which the population of Townsville increased by at least 37,000). Of those 6 industries only 3 have seen growth of 2,000 or more (Public Admin, Health Care and Transport). Major declines have been seen in Construction (down almost 6,000), Manufacturing and Retail Trade (both down almost 2,000) and falls of about 1,000 in many other sectors. The downturn in the Townsville economy has clearly been broad-based and impacted a large majority of industry sectors with a total loss of almost 6,000 jobs over the decade.

The full Conus Industry Trend series for all QLD SA4 regions is anticipated to be available after the release of the ABS Quarterly Labour Force data in June.

Note: The ABS Regional Jobs data will be released this Thursday (25th) at which time we will be updating our monthly Conus Trend Regional QLD Labour Force series.