Online Retail and the impact on regional employment

We all know that the Retail sector is facing a huge disruption in the form of online shopping. It’s been so for a while now and, with the emergence of Amazon in Australia soon, is only likely to become more pronounced.

Digging into the quarterly industry jobs (and in particular the Conus Trend Industry Jobs series which provides a more timely analysis than the original ABS data which is presented as a 4-quarters average) we can see the impact of this disruption on employment in the sector. In August we saw a total employment in the Retail Trade sector in Queensland of 250,800 (which was a decline of 400 from a year ago) but more crucially that figure represents just 10.7% of the total Queensland employment figure…which is the lowest since this data set started back in August 1999. In August 1999 that share sat at 12% (that’s a relative loss of more than 39,000 jobs in retail).

In the course of the last 18 years total jobs in the sector have increased by 56,900 with 33,700 of those coming in the Greater Brisbane area and 23,200 from the Rest of Queensland. However, in the past 6 years, as the online disruption has taken hold, we’ve seen total jobs in the sector rise just 4,900. And it would appear that the impact is being felt more keenly in the regions; Greater Brisbane has seen an increase of 14,900 jobs in that time while the Rest of Queensland has lost 10,000. If we look 4 years ago we see the sector losing jobs overall with Greater Brisbane up just 6,500 while the Rest of Queensland has fallen 15,600. 

Even when we consider the past year we see Greater Brisbane adding 5,600 new retail jobs while the regions lost 6,000. Jobs in the sector in Greater Brisbane are close to all-time highs while in the regions they are almost 16,000 below highs (about 4 years ago). The evidence appears clear; the regions are suffering far more from the online shopping disruption that the capital. It is perhaps not too hard to see why that might be the case. If access to quality, diverse and plentiful shopping (like in Greater Brisbane) is more difficult because of remoteness and size of market (like in most of the regions) then it is hardly surprising to see the traditional bricks-and-mortar stores suffering at the hands of online alternatives.

The story across the regions is not, of course, uniform but it is the case that almost every region has seen a reduction in retail sector jobs since those 2013 highs.  In the past 18 years the only two regions that have seen significant growth in retail sector jobs (despite a massive increase in employment generally) have been the Gold Coast and the Sunshine Coast.

The continued disruption of the retail sector, and the inevitable impact that will have on retails jobs, appears destined to impact the regions to a far greater extent than it does the Greater Brisbane area. 

More bad news for TNQ in the National Visitor Survey

The June quarter National Visitor Survey from Tourism Research Australia was released this morning (see here for full details), and it confirms the deteriorating story for the region we’ve been discussing for some time (see commentary from last quarter).

Across the nation domestic overnight visits rose 5.2% y/y and were up 6.2% in Queensland. However, in our own region TNQ saw a decline of 4.0%. Of even greater concern is the fact that expenditure from those overnight visitors fell by 9.1% (which is more than a 10% decline when considered in real, inflation-adjusted terms). The average number of nights also fell from 5.11 nights year ago to 4.89 nights now. TNQ now accounts for just 1.93% of all Australian domestic overnight visits; its lowest share of the market since the post-Yasi period in 2011.

 

Domestic day-trips fared somewhat better and were up 2.6% y/y with expenditure up 0.8% y/y. However, this sector accounts for just 12% of total domestic expenditure in the region.

Overall total domestic expenditure (for both overnight and day trips) in TNQ fell 8.0% in the year to June 2017. With international expenditure in the region also falling slightly in June (down 0.4% y/y) despite the solid pick-up in international tourist numbers, we see total visitor expenditure in the region falling by 5.6% (or closer to 7.5% in real terms) over the year. This is a reduction in visitor spending of almost $200 million over the past 12 months and would go a long way to explaining the seeming disconnect between the “booming” tourism numbers being recorded and the reality on the ground for many operators in the Far North.

 

Strong jobs growth. QLD strongest growth since GFC

The ABS data for Labour Force in August has shown a very strong growth in employment (up 54,200, seasonally adjusted) smashing market expectations of a 17,500 rise.  Back months were also revised higher. Employment is now up 325,600 in the past 12 months. Full-time employment reversed a decline in July to rise by 40,100 and is now up 251,200 (or 77% of employment growth). The seasonally adjusted unemployment rate now sits at 5.6% (which is down from 5.7% last month, although this was only revised up from 5.6% last week during an ABS rebenchmarking exercise!).

The less volatile Trend series shows employment up 27,100 in August (up 307,300 for the year). The Trend unemployment rate was stable at 5.6%. With Participation also increasing by 0.2 ppts there can be little doubt these are strong numbers.

Queensland too saw some strong numbers. Seasonally adjusted employment was up 16,700 (after June was revised higher) with full-time employment up 14,700. Over the course of the past 12 months employment is up 95,400 although only 19.5% of those were full-time. The headline unemployment rate has fallen sharply to 5.7% as Participation remained unchanged. The Trend series shows employment up 10,600 for the month and 87,200 for the year with the Trend unemployment rate falling to 6.0% (after July was revised down to 6.1% from 6.3%).

As the chart below makes clear, the last few months have been good ones for the QLD labour market as a whole although there will still be concern at the low number of full-time positions being created. However, with annual employment growth of 3.7% (and 3.2% last month) this is the strongest period of growth in QLD employment since the GFC. A government considering the timing of an election are likely looking at these numbers with a certain amount of pleasure.

Regional labour force data will be released by the ABS next Thursday at which point we will be updating our Conus Jobs Trend and quarterly Conus Industry Jobs Trend series

 

GDP +0.8% q/q and +1.8% y/y. Queensland doing much better

The GDP data for the second quarter has shown a solid rebound from the weak data last quarter and is broadly in line with market expectations. On a seasonally adjusted basis GDP rose 0.8% for the quarter, or 1.8% from the same time a year ago. This brings the cumulative increase for the 2016-17 financial year to a 2.0% increase, which is the slowest pace of growth since the beginning of 2010.

The stronger growth this quarter can be posted to a solid increase in Public capital formation (which added 0.6 ppts) and net exports which added another 0.4 ppts. Inventories detracted 0.6 ppts.

While household consumption, the largest component of GDP, rose 0.7% q/q (and contributed 0.4 ppts to GDP growth) this was due to a further decline in the household savings rate, which has fallen to 4.6%, its lowest level since the pre-GFC levels of 2008. In the face of weak income growth households are simply running down savings to maintain consumption levels.

The less volatile Trend series shows growth at +0.7% (after some upward revisions to previous months) with annual growth at just +2.1%, the weakest result since Q2 2010.

In Queensland we see State Final Demand (which does not include the State’s strong export sector) up a solid 1.1% q/q (after Q1 was revised up from unchanged to +0.2%). Year on year growth is now running at +2.8% which is the best result in 5 years.

In Trend terms State Final Demand rose 0.7% q/q and as the second chart below shows is being kept positive by the impact of Public sector spending (most notably public CAPEX which is up 4.4% q/q). Private CAPEX data shows a 0.3% q/q increase and also saw previous quarters revised from slight falls to small rises.

Today’s data is a strongly positive sign for the State’s economy. Particularly when we combine this result with the signs of a solidly performing export sector which is likely to see Gross State Product data (when we finally get it) looking much healthier. For a government considering when to call an election this data should be a welcome addition.

 

International Visitor growth leaves Queensland behind

Today sees the release of the June quarter International Visitor Survey from Tourism Research Australia (full report available here); and although visitor numbers are up strongly it’s not a happy story for Queensland.

Visitor numbers to Australia show a 8.7% y/y increase to almost 7.9 million (another new record high). Expenditure also rose strongly, up 10%, to almost $27.9 billion over the year. Average spend per visitor rose 1.1%, barely in line with inflation.

Queensland’s data was far less impressive. Visitor numbers rose 5.6% which was the weakest increase across all states and territories. Expenditure in Queensland was up an even weaker 3.2% (also the slowest of all states and territories) which resulted in average spend per visitor which fell 2.3% to $1,998. Queensland’s share of the total international visitor market has now fallen to an all time low of just 33.2%; it stood as high as 43% a decade ago.

In our own region, despite the impact of surging Chinese visitors, things are weaker still. Total visitor numbers to TNQ were up just 4.4% for the year while total expenditure actually fell by 0.4%. The average spend per visitor to TNQ is down a disturbing 4.8% over the year (in real terms this is in excess of a 6% decline). These are numbers that must be concerning for the new CEO at TTNQ and should give pause for thought to all those involved in the industry in the North. What is it that the region is not offering to international visitors such that the region’s share of the international market continues to languish close to all time lows?

We shall post further breakdown of the TNQ data once we receive more detailed numbers from TRA later today.

The June National Visitor Survey is due for release in a fortnight.

 

Cairns population growth beats Townsville in past decade; but both fall behind QLD

Data released today for Estimated Resident Populations in regional areas shows the population of the Cairns SA4 region climbed 18.1% in the decade to June 30th 2016 reaching 247,762. This was somewhat faster than estimated growth in Townsville SA4 which was +16% to 235,037.

However, both regions fell behind growth in the state which was 21% to 4,848,877.

Estimates for the Local Government Areas as at 30th June 2016 are;

Cairns Regional Council; 162,451

Douglas Shire; 11,997

Tablelands Regional Council; 25,312

Mareeba Shire; 22,157

Cassowary Coast Regional Council; 29,396

Townsville City Council; 192,058

Note: ERP figures are not equivalent to the 2016 Census data as the ERP includes estimates for Australian residents overseas as at June 30th, an allowance for Census under-count, relate to different dates (the 2016 Census was completed on 9th August), and does not include foreign short-term visitors to Australia.

Regional Jobs; more good news for the North

Today we saw the release of the ABS regional jobs unadjusted data for July. As always, we have to consider the Conus Trend data to make much sense of this highly volatile data-set; and what that shows us is a continuing good-news story in the North.

Trend employment in the Cairns SA4 region has increased by 800 in July to 120,200. The Trend unemployment rate has remained stable at 5.0% (but only after June was revised down from 5.3%). Trend Participation has also increased to 63.1 and is now at its highest level since Oct 2013. Over the year a total of 12,500 extra people are employed with 9,700 of those in the form of full-time employment.

In Townsville the ongoing recovery continues with Trend employment increasing by another 1,000 in July to 111,200. This is an increase of 15,700 over the past 12 months with 9,500 of those full-time positions. Trend unemployment has fallen again to 6.3% which is the region’s lowest since Nov 2013. Participation in Townsville has also increased in July to 62.7. Trend employment growth in Townsville now sits an annual rate of 16.5%, the highest in the state and well above the state average of 2.7%.

As we have been seeing for some time, the regions are beating Greater Brisbane in the race for jobs. The Rest of Queensland has added 45,100 Trend employment in the past 12 months while Greater Brisbane is up just 18,900. Trend employment growth in Greater Brisbane is running at 1.6% pa while in the Rest of Queensland it sits at 3.9%. More starkly, full-time employment in the Rest of Queensland is up 33,800 over the period while it has fallen by 12,700 in the capital.

Youth unemployment remains a concern in Townsville where the Trend rate of unemployment in the 15-24 year old cohort has increased to 18.7% (3rd highest in the state) despite 1,000 more Trend employed in the age group. In Cairns Trend youth unemployment also nudged higher to 11.5% in July but only after June was revised sharply lower from 12.6%; the region has added 3,300 new Trend employment in the group over the past 12 months.

The full Conus Trend data-set is available for free download below (for non-commercial use). We would appreciate you acknowledging Conus when you use it.

Conus Trend Regional Jobs QLD – July 2017

 

Experimental Environmental-Economic Accounts for the Great Barrier Reef; a welcome addition

The ABS have today produced the first edition of a new data set, the Experimental Environmental-Economic Accounts for the Great Barrier Reef (full details here). There’s a lot of information here, sourced from a wide variety of sources, but some highlights include:

Marine Condition indicators which show Coral condition at 44 (41-60 is classified as “moderate”), Seagrass at 33 (21-40 is “poor”) and Water Quality at 43 (also “moderate”). Across the various NRM regions Coral condition scores were best in Mackay-Whitsunday (58) and worst in Fitzroy (22). Seagrass conditions were best in Buedekin (53) and worst in Fitzroy. Water Quality conditions were best in Mackay-Whitsunday (58) and worst in the Wet Tropics (33).

The dollar value of  benefits produced using ecosystem services (which includes both marine and terrestrial regions) increased from just over $8 billion in 2006-07 to just over $15.1 billion by 2014-15 (with tourism accounting for more than $9 billion of that).

Queensland notches up another positive jobs report

The ABS release of Labour Force data for July shows the Trend unemployment rate in Queensland stable at 6.3% having added 8,300 employed for the month (+27,000 seasonally adjusted) after June was also revised slightly higher. This is now the 9th straight month of Trend increases and pushes total employment gains over the past year to 64,000; of those increases just under a third have been full-time. The more volatile seasonally adjusted data shows the unemployment rate having fallen from 6.5% in June to 6.2% in July.

While Queensland has improved, the pace of that improvement still fails to match that seen at a National level. The nation added 27,900 (seasonally adjusted) or 26,000 (Trend) employed in July and saw the unemployment rate stable at 5.6% on both measures. Despite full-time positions falling in July over the course of the year the country has added 239,300 new employed with 197,700 (or 83%) of those full-time.

Regional labour force data will be released next week at which time we will be updating the Conus Trend Regional Jobs data series.