Pete was on radio 4CA this morning with John MacKenzie talking about his submission to the Productivity Commission’s Transitioning Regional Economies report (you can download the full submission from the PC website here). You can listen to the interview below.
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.
The ABS have released their regional population estimates (up to mid year 2016) today and they show the North of the state lagging recent growth elsewhere. The data is provided at the Local Government Area (LGA) level as well at SA2 and above. Taking the LGA data first…
|LGA||2016 est||annual change %||decade change %|
While Cairns and Townsville have outpaced QLD growth over the past decade, that out-performance has now ceased with growth just 70% of the state average in the past year. The Cassowary Coast has finally returned to positive territory (although only just!) while the Tablelands Regional Council area has also been weak.
If we break the Far North (i.e. Cairns SA4) data down even further we can see quite a diverse range of outcomes across the region.
|SA4||SA3||SA2||est||change annual %||change decade %|
|Clifton Beach – Kewarra Beach||11,642||+2.1||+40.5|
|Freshwater – Stratford||4,058||+1.0||+10.5|
|Trinity Beach – Smithfield||13,216||+3.2||+60.4|
|Yorkeys Knob – Machans Beach||6,394||+0.6||+5.0|
|Earlville – Bayview Heights||8,721||+0.5||+4.1|
|Gordonvale – Trinity||8,890||+0.5||+28.3|
|Kanimbla – Mooroobool||10,184||+1.4||+15.1|
|Westcourt – Bungalow||7,012||+1.0||+23.0|
|Whitfield – Edge Hill||8,580||+0.3||+2.4|
|Malanda – Yungaburra||8,306||-0.2||+2.3|
Cairns North, and in particular Trinity Beach, Clifton Beach and Redlynch, has been the stand-out growth area over the past decade, with Trinity and Clifton Beach still growing faster than average last year. In the south, Edmonton and Gordonvale have seen rapid growth over the past 10 years.
Outside of Cairns, Port Douglas has done well over the decade and continues to outperform the region as a whole. In the Cassowary Coast the only area to see growth at all over the 10 years was Tully (which includes Tully, Mission Beach and Cardwell) with the areas around Innisfail all falling. (Although Yarrabah is in the Innisfail-Cassowary Coast SA3 it is not in the Cassowary Coast Regional Council area. Babinda, likewise, is in the Cairns Regional Council area.)
Over the past few years there has been much discussion about the impact that demographic changes (particularly an aging population) are having on the labour market. In particular, focus has been on the effects of varying participation rates within different age groups and the impact these are having on the level of employment.
First, some definitions (simplified) as used by the ABS:
- Employed:- anyone over the age of 15 who worked for pay at least one hour in the reference week, or people who had a job but were away from paid work for less than 4 weeks, or were on strike or workers compensation etc.
- Unemployed:- anyone over the age of 15 who does not have a job but who has actively looked for a job at any point during the previous 4 weeks period.
- Labour Force:- the sum of those employed and unemployed.
- Unemployment Rate:- the percentage of the Labour Force who are unemployed.
- Participation Rate:- the percentage of the civilian population aged 15 and over who are in the Labour Force.
One effect of those definitions is that as the Participation Rate (PR) falls (i.e. a smaller percentage of the population are in the Labour Force) so the lower will be the unemployment rate for the same level of those employed. The inverse is also true.
Therefore, if we see significant changes to PR levels then it may be that the “headline” unemployment rate is no longer giving us a true and fair representation of what is happening in the labour market. For example, if the unemployment rate has risen only slightly, and yet the PR has fallen sharply, then the labour market is almost certainly far weaker than the headline unemployment rate would suggest.
Classically one sees the PR fall during periods when the labour market is weak. The reason for this can be easily understood; with high unemployment many workers will remove themselves from the Labour Force. They will become discouraged and stop looking for work. This results in the PR falling. Once the labour market returns to strength these people may well return to the Labour Force again and thus the PR moves back up.
However, we need to bear in mind that there may be reasons behind a change in the PR that have little to do with the actual health of the labour market. Rather they are due to changes in the demographic make-up of the population. To understand why this might be we need only consider a couple of examples. When we consider the age group of 15 to 24 year olds it would come as little surprise to discover that the PR will be depressed by a large number within this group being in tertiary education, and therefore not in the Labour Force. Alternatively, if we consider the “peak” age group of workers (i.e. 25 to 44 year olds) the PR will be high since the vast bulk of this group are likely to be in the Labour Force (either in work or looking for work). In particular, if we consider the older demographics (45+ years) it should be no surprise that the over 65’s in particular tend to have a lower PR; few of them are still working and those that aren’t are not looking for work (i.e. they are not “unemployed” and therefore not in the Labour Force).
What becomes clear therefore is that a change in PR will be due to the impacts of two factors;
- the change of PR within age groups (the effects of discouragement etc.)
- the change in the proportion of those age groups amongst the total population (the effects of demographic change)
As we can see from the graph below, the PR has shifted significantly throughout Queensland since 1998 with particular falls witnessed since the impact of the GFC. But how much of that change in the PR is due to demographic shifts and how much to weakness in the labour market?
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 precise method employed is not relevant for this discussion (although keen readers will be able to access the original paper here) but suffice to say that it involves weighting changes of the relative percentage of total population in each age group by the PR rate of that age group at the start of the comparison period. At the same time we weight the change in PR within each age group by the percentage of total population in that age group at the end of the comparison period. The sum of these two changes will total to the change of the total PR across all age groups between the comparison dates. We have used this process together with our own Conus Trend series for the three age groups (Youth 15-24, Middle 25-44 and Older 45+ yrs) for all the SA4 regions within Queensland. We have considered demographic changes since October 1998 to January 2017.
The chart below shows the original Conus PR along with the PR adjusted to remove the impact of the change in demographic make-up for both Rest of Queensland and Greater Brisbane. Therefore, what the dotted lines shows us is what the PR rate would have been had there been no change in the demographic make-up since October 1998.
In makes it clear that had we not seen these demographic changes the underlying PR’s across the state would have been somewhat higher. What it also demonstrates is that the impact of the changes (largely an aging population) has had a far greater effect outside of Greater Brisbane. Quite simply, over the period the Older cohort in Greater Brisbane has increased from 41% in 1998 to 45% now; in the Rest of Queensland it’s gone from 44.5% to almost 53% over the same period.
Since the end of 1998 Trend PR in Greater Brisbane has increased by 0.5%; however, demographic changes have decreased PR by 1.2%. The impact of increases in PR rates within the age groups has more than outweighed that decline to result in the net increase. In the Rest of Queensland over the period Trend PR has declined by 2.3% with demographic changes knocking 2.6% off PR with actual PR changes within the age groups adding only slightly.
If we consider the situation for our own region we see a similar pattern. Trend PR in Cairns has fallen by almost 8% since 1998 with demographic changes causing 2.5% of that decline (very similar to the impact across the Rest of Queensland as a whole) with the remainder of the fall coming from PR changes within the age groups.
The story to our south in Townsville is somewhat different. Here Trend PR has also fallen by 7.5% since 1998 but only a much smaller part of that decline (1.6%) can be laid at the door of demographic change; the rest is down to a decline in the PR within age groups.
ABS estimated annual population growth has picked up slightly in the June from the previous quarter. Growth in Queensland increased from +1.30% to +1.35% over the quarter but remains below the national average of +1.42%. Victoria continues to lead the pack with growth picking up to +2.07% in the June quarter.
We should all be aware by now that the labour market picture in QLD is not a happy one; according to the latest ABS data for June the State’s unemployment rate stood at 6.5% (both s.a. and Trend) against that in the nation of 5.8% (s.a) or 5.7% (Trend). The level of Underutilisation (those unemployed and also underemployed) was also slightly higher at 14.5% (s.a) versus 14.2% (s.a.) nationally (figures for May).
Over the past 12 months Trend employment has grown at 1.8% in Australia but only at 0.4% in QLD. Perhaps of more concern, full-time employment is up by 1.1% nationally but has fallen by 1.2% in the State.
It’s clear that jobs in QLD are simply not keeping up with the growth in the working population. Over the past 2 years the State’s working population has grown by 2.8% while Trend employment is up by just 0.5%. When we look at the split between Greater Brisbane and the Rest of QLD the story gets even worse. At present the Trend unemployment rate in Greater Brisbane is 5.7%; in the Rest of QLD it’s 7.2%.
Over the past 24 months Trend employment in Greater Brisbane has risen by 2.2%; in the Rest of Queensland its fallen by 1.2%. Full time employment in Greater Brisbane is up by 3.1% while in the Rest of QLD it has fallen by 2.1%.
And this isn’t just a recent phenomena. If we consider data from the past 5 years we see QLD’s working population having grown by 3.5%, but Trend employment in the Rest of QLD is up just 1.5% while in Greater Brisbane the increase is 5.5%. Five years ago there were 2.7% more people employed in the Rest of QLD than in Greater Brisbane; today there are 1.3% fewer. At that time the Trend unemployment rate in Greater Brisbane was 4.6%; in the Rest of QLD 6.2%.
What becomes obvious is that, when compared to the nation as a whole, QLD is doing badly but is doing so solely on the back of the weak regional performance. Greater Brisbane is doing at least as well, and in many cases better, than the nation.
Clearly the regions have suffered far more than Greater Brisbane as the mining investment cycle has drawn to a close. For years we have heard politicians at both State and Federal level, and from both sides of the aisle, promising more to address the issues that regional QLD faces. And yet there is no sign of anything concrete having been done. Short term, electorally driven boosts (I’m looking at you Townsville stadium) being committed to without any apparent economic analysis simply won’t cut the mustard. If we really want our regions to succeed (and that in itself is a question we must all answer honestly first) then there needs to be some serious thinking around what are the factors holding back regional economic growth, and what can be done to address them.
For more details about how some of the QLD regions are performing relative to Greater Brisbane see our post from a few days ago or download the Conus Trend QLD Regional Jobs data from the Reports page. The next Labour Force data is due for release on 18th August with the regional data (and the updated Conus Trend) released a week later.
The ABS Labour Force data for May shows a total of 17,900 new jobs in the nation, although all of them were part-time with full-time numbers static. The headline unemployment rate remained stable at 5.7%. However, virtually all of the reported gains in April were revised away with the previous 10,600 reduced to just 800. Jobs growth now sits at 1.9% y/y while the working population is growing at about 1.5% which is why we’ve seen Trend unemployment fall from 6.1% to 5.7% over the year.
Unfortunately the picture in Queensland continues to be a weaker one. Although the seasonally adjusted unemployment rate managed to fall slightly to 6.4% (from 6.5%) this is on the back of further job losses (down 1,700) with even more full-time jobs going (4,500). The only reason the unemployment rate has managed to drop is the decline in the Participation Rate to a level not seen since Sept 2004. Looking through the PR effect we see the Employment:Working Population measure down to 60.8 (it’s lowest since Nov 2014). The Trend data doesn’t provide any brighter notes with the Trend unemployment rate rising to 6.4% (from 6.3%…which was in turn revised up from 6.2%). Trend employment growth in the Sunshine State now stands at just 1% while the working population is increasing at 1.4% (see the second chart below).
Regional jobs data will be released next Thursday at which time we will be updating our Conus Trend Labour Force data for all the QLD regions.
Today’s release of the April Labour Force data from the ABS contains little to surprise at a national level, but the story for the Sunshine State is weaker again.
April saw 10,800 new jobs (although these were all part-time with full-time jobs falling by 9,300 seasonally adjusted) and the headline unemployment rate stable at 5.7%. Jobs growth is now at 2.1% pa with employment just about keeping up with working population growth; the employment:working population measure remains stable at 61.1, where it has been for three months. The less volatile Trend series sees the unemployment rate dip slightly to 5.7% from 5.8% although Trend employment registered its lowest growth since Sept 2014 (+4,100).
In Queensland the string of weaker numbers continues. Seasonally adjusted data shows a decline of 5,600 which is the third consecutive month of falls. As was the case nationally part-time jobs increased (although only by 1,200) while full-time positions fell by 6,800. The headline unemployment rate increased to 6.5% while March was revised higher to 6.2% (from 6.1%). The seasonally adjusted data at a state level has been highly volatile so we prefer to focus on the Trend series.
The Trend saw jobs fall by 4,100; the third month of consecutive falls and the worse result since Oct 2014. The Trend unemployment rate increased to 6.2% (after March was revised up to 6.1%). Trend employment is growing at just 1.5% pa which is simply not fast enough to keep up with working population growth (see the second chart below). As a result the employment:working population measure has fallen again to 61.3 . There can be little doubt that the labour market in Queensland is weak and getting weaker; in Trend terms only South Australia at 6.8% is worse than Queensland.
Regional labour force data will be released next Thursday, at which point we will be updating our Regional Queensland Conus Trend data.
Today’s release of ABS Regional Labour Market data is a very clear tale of two very different cities in the north of the State.
Once we have adjusted the raw ABS data, and therefore created the Conus Trend series, we see that Trend Employment in Cairns rose by 400 in March (after Feb was revised higher to +700). Over the course of the past 12 months Trend Employment in Cairns is up 3,300. However, this seemingly positive result is rather tempered by the realisation that an increase in Trend Participation over the same period (from 60.3 to 61.0) combined with an increasing population, has seen the Trend Unemployment Rate increase from 7.6% a year ago to 8.4% today (with Feb revised up to 8.0% from 7.6%). When we consider the Trend Employment:Working Population measure (which “sees through” this Participation effect) we see this has remained largely stable at 55.8. The conclusion we can draw from all this is that, although Trend employment growth is running at about 3%, this is less than sufficient to improve the overall employment picture given a slightly increasing Participation Rate and an increasing population.
The story in Townsville is less ambiguous. The Conus Trend Employment data shows employment in Townsville at its lowest level since Feb 2005 having fallen 1,500 in March and a total of 11,300 over the past year. Trend Participation has also fallen sharply over the course of the year (from 65.8 to 59.0) but this has not been enough to compensate for the falls in employment; the Trend Unemployment Rate in March stands at 8.8%, up from 7.8% a year ago. This is now the third worst rate in the state behind Ipswich (8.9%) and Outback Qld (13.1%..caution on this number!). Looking through the Participation impact (which has mitigated a much faster rise in Trend Unemployment Rate) we see the Trend Employment:Working Population measure down at 53.7 (having fallen from 60.7 a year ago). This data shows the employment situation in Townsville as unambiguously terrible. Given that the complete fall-out from the QN debacle is yet to be seen in this data we do not expect to see this improving anytime soon.
Looking at the Cairns data in more detail shows us a continuing story of concern with regard to Youth Unemployment. The Conus Trend has youth unemployment sitting at 28.8% (up from 27.8% in Feb which in turn was revised up from 27.5%). With Trend Youth Employment having fallen for each of the past 11 months there is clearly much to worry about here.
The older cohort (45 years and older) has also seen a decline in Trend Employment over the past two months but the Trend Unemployment Rate remains at 4.4% (unchanged from Feb which was revised from 3.9%).
The full Conus Trend Queensland Regions labour force data is available for download below. Please feel free to use this data as you wish but we would appreciate acknowledgement if you do so.
Today sees the release of the ABS Regional Population estimates as at mid-year 2015 and they show us a small decline in the estimated population of the Cassowary Coast Local Government area to 28,689 (from 28,694 a year earlier). Over the course of the past decade the population of the CCRC region has fallen from 29,124 ( a 1.5% decline) which is in stark contrast to a 25.9% increase seen in the Cairns Regional Council area to 160,285.
When we consider the breakdown within the CCRC area into the Statistical Area 2 (SA2) regions of Innisfail, Johnstone and Tully over the 10 years we see that Innisfail has seen a 2.7% drop, Johnstone has fallen by 2.5% while Tully (which includes Tully, Cardwell and Mission Beach) is down just 0.6%. Over the past 4 years we have actually seen some growth in the south with Tully SA2 up 0.8% while Johnstone SA2 and Innisfail SA2 have both contracted (by 1.2% and 0.3% respectively). Given the information released by the ECQ on the size of the electoral divisions in the region (see table below) it is not hard to see that the population growth in the south has been exclusively focused in Division 3 (Mission Beach, El Arish and Kurrimine Beach). The fact that the ECQ electoral roll shows growth in the northern divisions (4, 5 & 6) since 2012 would appear to suggest that the ABS estimates for the SA2 areas Innisfail and Johnstone may need to be revised somewhat higher when the 2016 estimates are produced.
We must take care however when considering this data since the ABS and ECQ data are not only taken at different times (i.e. ABS data relates to estimates at June 2015 while ECQ electoral roll is for March 2016) but they relate to different areas and different counts. While the CCRC area is largely SA2 areas Innisfail, Johnstone and Tully the two are not strictly the same. In addition, while electoral divisions 1, 2 and 3 are roughly equal to Tully SA2, they are not exactly the same. Finally, the ABS data relates to total population while the ECQ data relates only to registered voters.